Van Wagoner Corporation has multiple facilities across the United States. Management evaluates each facility based on the capital turnover ratio using the DuPont system. The following information pertains to the facility in Pennsylvania for the past year:

The manager of the Pennsylvania facility has requested that gross sales (prior to subtracting sales discounts and returns) be used in the calculation of the capital turnover ratio instead of net sales (net of sales discounts and returns). Compute the capital turnover ratio using (1) gross sales and (2) net sales. Which sales figure results in a higher capital turnover ratio? Should management use gross sales as requested by the Pennsylvania facility? Why or why not?

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Sales (prior to subtracting sales discounts and returns). Sales (net of sales discounts and returns) Operating expenses.. Total assets.. $ 6,930,000 6,300,000 2,940,000 10,500,000