Question

Return on Total Assets

A company reports the following income statement and
balance sheet information for the current year:
Net income
Interest expense
Average total assets
$386,760
68,250
5,230,000
Determine the return on total assets. If required, round
the answer to one decimal place.
6, Incorrect

Answer 1

The return on total assets (ROTA) can be calculated using the formula:

ROTA = Net Income / Average Total Assets

Using the given information, we have:

ROTA = $386,760 / $5,230,000 = 0.0739 or 7.39%

Therefore, the return on total assets for the company is 7.39%. Note that this answer is rounded to two decimal places.