Question

Chou Co. has a net income of $43,000, assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000. Compute its return on assets.

Answer 1

Answer:

15.64%

Explanation:

Return on Assets = $\frac{Net Income}{Average Total Assets}$

= $\frac{43,000}{(250,000 + 300,000)/2} = \frac{43,000}{275,000}$

= 0.1564

= 15.64%.