Question

Rosalind company reported revenues of $111,500, expenses of $92,545, and net income of $18,955 for the year. assets totaled $200,000 at the beginning of the year and $246,000 at the end of the year. the company's return on assets for the year (round the percent to one decimal) is

Answer 1

Return on assets =
net income÷average total assets

Net income=18,955

Average total assets
(200,000+246,000)÷2=223,000

Return on assets is
18,955÷223,000
=0.085

Answer 2

The answer is: 8.5%

Step-by-step explanation:

Return on assets (ROA) is a ratio used to compute the efficiency of management in using business assets to generate profit. It is the net income expressed as a percentage of the average total asset value for the period in which the profit was generated. This ratio by itself does not give a holistic picture of the profitability of the company or the effectiveness of management. It is however used as a measure of competitiveness when compared with the ROA's of other businesses in the same industry.

Rosalind company ROA is determined as follows:

Net income/Average Total assets * 100%

$18, 955/(($200,000 + $246,000)/2) *100%

$18, 955/$223,000*100%

0.085 * 100%

= 8.5%