Refer to the Racer Sports Data Set. Racer Sports Company makes snowboards, downhill skis, cross-country skis, skateboards,

Question:

Refer to the Racer Sports Data Set.
Racer Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year:

Racer€™s management has specified a target 15% rate of return. The company€™s weighted average cost of capital (WACC) is 12%, and its effective tax rate is 35%.
1. Compute each division€™s asset turnover (round to two decimal places). Interpret your results.
2. Use your answers to Question 1 along with your answers to S11-11 to recalculate ROI using the expanded formula. Do your answers agree with your ROI calculations in S11-10?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...