Question

The following data pertain to Cowl, Inc., for the year ended December 31, 2004: Net sales $ 600,000 Net income 150,000 Total assets, January 1, 2004 2,000,000 Total assets, December 31, 2004 3,000,000 What was Cowl's rate of return on assets for 2004?

Answer 1

Answer:

Cowl's rate of return on assets is 6%

Explanation:

given data

Net sale =  $ 600,000

Net income =  150,000

Total assets = 2,000,000

Total assets =  3,000,000

solution

we get here Rate of return on assets that is express as

Rate of return on assets =  net income divided by the average total asset  ........................1

here average total asset  = $\frac{2,000,000+3,000,000}{2}$  = $2,500,000

put here value and we get

Rate of return on assets =  $\frac{150,000}{2,500,000}$      

Rate of return on assets = 6.0%

so here Cowl's rate of return on assets is 6%