Question

Assume MetAmbit Corporation had a net income of $2,300 for the year ending December 2016. Its beginning and ending total assets were $34,500 and $20,000​, respectively.

Calculate​ MetAmbit's return on assets​ (ROA).

A. 6.67​%
B. 11.50​%
C. 8.44​%
D. 4.22​%"

Answer 1

To calculate MetAmbit's Return on Assets (ROA), we divide its net income by its average total assets. In this case, the ROA is 8.44%.

Option 'C' is the correct.

Step-by-step explanation:

To calculate MetAmbit's Return on Assets (ROA), we use the formula:

ROA = Net Income / Average Total Assets

First, we need to calculate the average total assets:

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2

Plugging in the values, we get:

Average Total Assets = ($34,500 + $20,000) / 2 = $27,250

Next, we calculate the ROA:

ROA = $2,300 / $27,250 = 0.0844

Finally, we convert the decimal to a percentage:

ROA = 0.0844 * 100 = 8.44%

Therefore, MetAmbit's Return on Assets (ROA) is 8.44%.