**Capital Turnover Calculation for the Bedding Division of Homestore Corporation**The Bedding Division of Homestore Corporation achieved sales of $9,000,000 and an operating income of $1,620,000 in the previous year. The division's total assets were valued at $2,500,000, with current liabilities amounting to $310,000. Homestore Corporation aims for a target rate of return of 11%, with a weighted average cost of capital sitting at 9%. The company also has an effective tax rate of 25%.**Question:**What is the Bedding Division's capital turnover?**Options:**- A. 29- B. 3.6- C. 8.1- D. 5.6**Explanation:**The capital turnover ratio is a measure of how efficiently a company uses its assets to generate sales. It is calculated by dividing the sales by the total assets.**Solution:**\[ \text{Capital Turnover} = \frac{\text{Sales}}{\text{Total Assets}} = \frac{9,000,000}{2,500,000} = 3.6 \]The correct answer is **B. 3.6**.

Given, Sales= $9,000,000 Operating Income =$1,620,000 Total Assets =$2,500,000 Current Liabilities…

Answered: The Bedding Division of Homestore…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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