Question

Net income $ 15,953 Net sales 712,855 Total liabilities, beginning-year 83,932 Total liabilities, end-of-year 103,201 Total stockholders' equity, beginning-year 198,935 Total stockholders' equity, end-of-year 121,851 The return on total assets is:

Answer 1

Answer:

The return on total assets is 6.28%.

Explanation:

The return on total assets can be found from the following formula:

Return on Assets = Operating Profit / Average assets......Equation 1

And

Average Assets = (Opening Assets + Closing Assets)/2.........Equation 2

As here we are not given Opening assets and closing assets amount but we can find them through the following formula:

Opening Assets = Opening Equity + Opening Liability

Opening Assets = $198,935 + $83,932 = $282,867

Likewise

Closing Assets = Closing Equity + Closing Liability

Closing Assets = $121,851 + $103,201 = $225,052

Putting values in the Equation 2, we have:

Average Assets = ($282,867 + $225,052)/2 = $253959.5

Now by putting values in the Equation 1, we have:

Return on Assets = $15,953 / $253959.5 = 6.28%