Question

Shown below are selected data from the financial statements of Supreme Co. Dollar amounts are in millions (except for the per share data).

Income statement data:
net sales-$1,230
cost of good solds- $ 520
Operating expenses- $440
net income- $390
Balance Sheet data:
average total equity- $2400
average total assets- $4000

Supreme reported earnings per share for the year of $4 and paid cash dividends of $1 per share. At year-end, the Wall Street Journal listed Supreme's capital stock as trading at $88 per share.

Refer to the information above.Supreme's return on assets was ___.

Answer 1

Supreme Co.'s return on assets (ROA) is calculated as 9.75% by dividing their net income of $390 million by their average total assets of $4000 million and converting the result to a percentage.

Step-by-step explanation:

Supreme's Return on Assets (ROA) is a measure of a company's profitability relative to its total assets. It is calculated by dividing the net income by the average total assets. Using the data provided:

Net Income = $390 million

Average Total Assets = $4000 million

To calculate the ROA:

Divide the net income by the average total assets.

Multiply the result by 100 to convert it to a percentage.

ROA = ($390 million / $4000 million) × 100 = 9.75%

Therefore, Supreme's return on assets was 9.75% for the year.