Question

Speedy has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.
a. 9.5%.
b. 13.0%.
c. 8.5%.
d. 7.7%.
e. 11.8%.

Answer 1

Answer:Return on Assets =8.5% -c

Explanation:

Given that

net income =$18,955

Assets at the beginning of the year = $200,000

Assets at the end of the year = $246,000

Return on Assets = Net Income / Average Total Assets

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

=($200,000 + $246,000)/ 2

=$446,000/2

$223.000

Return on Assets =$18,955/$223.000

=0.085 x 100

=8.5%