Question

Hot Shot Delivery Inc. provides the following year end data:

2018 2017

Cash $65,000 $38,000

Accounts Receivable 60,000 39,000

Merchandise Inventory 66,000 26,000

Property, Plant & Equip 219,000 154,000

Total Assets 410,000 257,000

Sales Revenue $530,000

Cost of Goods Sold 180,000

Interest Expense 30,000

Net Income 112,000

Calculate the rate of return on total assets for 2018.

55.3%

52.5% Incorrect.

42.6%

27.3%

Answer 1

27.3%

Step-by-step explanation:

rate of retun on assets:

`(Income)/(Assets) = $Assets rate of return`

​where:

Net income: 112,000

2018 Assets: 410,000

`(112,000)/(410,000) = $Assets rate of return`

$Assets rate of return 0.2731707317073171‬ = 27.32%

During 2018 each dollar of assets generate 27.32 cents of income.