Question

Wave Engineering has a target rate of return of 17% and a cost of capital of 9%. Wave has both a breakwater division and a seawall division. During the current year, the breakwater divisions returr on investment is 14% and its capital turnover ratio is 2.5, what is the breakwater divisions sales margin? 16.4% 08.2% 3.1% 15.6% None of the above
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Answer #1

Net income/Invested capital = 14%

Net sales/Invested capital = 2.50

Sales margin:

= 14%/2.50

= 5.6%

Hence, correct option is 5.6%

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