Question

Cruz company had revenues of 80175 and expenses of 50000 for the year its assets at the beginning of the year were 400000 at the end of the year assets were worth 450000

Answer 1

The return on assets for Cruz Company with a total revenue of $80,175 and total expenses of $50,000, given average assets of $425,000 is 7.1%.

Return on Assets = Net Income/Average Assets x 100

= $30,175/$425,000 x 100

= 7.1%

• The return on assets indicates the profitability of Cruz Company relative to its assets.  It is expressed as a percentage by dividing the Net Income with the Average Assets, then multiplied by 100.

Data and Calculations:

Revenue =       $80,175

Expenses =    $50,000

Net income = $30,175

Assets:

Beginning balance = $400,000

Ending balance = $450,000

Average assets = $425,000 ($400,000 + $450,000)/2

Thus, the return on assets equals 7.1% for the year.

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