Question

Brief Exercise 9-10Incorrect answer. Your answer is incorrect. Try again.Suppose in its 2017 annual report that McDonald’s Corporation reports beginning total assets of $28.15 billion, ending total assets of $30.50 billion, net sales of $22.95 billion, and net income of $4.10 billion.(a) Compute McDonald’s return on assets. (Round return on assets to 2 decimal places, e.g. 5.12%.)McDonald’s return on assetsEntry field with incorrect answer%(b) Compute McDonald’s asset turnover. (Round asset turnover to 2 decimal places, e.g. 5.12.)McDonald’s asset turnoverEntry field with incorrect answer

Answer 1

Answer: return on assets = 13.98%

assets turnover = 0.78

Explanation: A. COMPUTING RETURN ON TOTAL ASSETS :-

Return on total assets can be defined as the return the owners of the company get for investing in the total assets of the entity. It is used as a performance measure.

$=\:Formula\:=\:\frac{net\:income}{average\:total\:assets}$

where,

$=\:average\:total\:assets\:=\frac{begining\:assets+ending\:assets}{2}$

$=\:average\:total\:assets\:=\frac{28.15+30.50}{2}$

     = 29.32

therefore:-

$=\:Formula\:=\:\frac{4.10}{29.32}$

      = 13.98%

.

B. COMPUTING ASSET TURNOVER :-

It shows the ability of assets of a business to generate income.

$=\:Formula\:=\:\frac{net\:sales}{average\:total\:assets}$

$=\:Formula\:=\:\frac{22.95}{29.32}$

=0.78