Answer:
19.4 %
Step-by-step explanation:
The formula for return on assets (ROA) is
ROA = Net income /Total assets × 100 %
Since assets vary, we use the average of the total assets over the period.
Calculate the average total assets
At beginning of year, total assets = $263 000
At end of year, total assets = $313 000
Average = (313 000 + 263 000)/2
Average = 576 000/2
Average = $288 000
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Calculate the ROA
Net income = $56 000
ROA = 56 000/288 000 × 100 %
ROA = 0.194 × 100 %
ROA = 19.4 %
The company’s return on assets is 19.4 %.
