Question

Dawson Electronic Services had revenues of $98,000 and expenses of $59,000 for the year. Its assets at the beginning of the year were $409,000. At the end of the year assets were worth $459,000. Calculate its return on assets.

Answer 1

Answer:

Return on assets of Dawson Electronic Services is 8.99%

Explanation:

Return on assets (ROA) helps an investor see how much after-tax profit a company gained for each dollar in assets, is calculated by formula:

ROA = Net Income/  Average Total Assets

In there,

Average Total Assets  = (Assets at the beginning of year  +Assets at end of year )/2

In Dawson Electronic Services:

Net income = Revenues - Expenses = $98,000 - $59,000 = $39,000

Average Total Assets = ($409,000 + $459,000)/2 = $434,000

ROA = $39,000/$434,000 = 8.99%