Final answer:
The Return on Assets (ROA) for Park Corporation is calculated by taking their net income divided by the average total assets. With a net income of $180,000 and average total assets of $840,000, the ROA is calculated to be 21.4%. The correct answer is option B. 21.4%.
Step-by-step explanation:
The student is asking how to calculate the Return on Assets (ROA), which measures how efficiently a company uses its assets to generate net income. To calculate ROA, you divide the net income by the average total assets for the period. The average total assets are calculated by adding the assets at the beginning and the end of the year, and then dividing by two. Therefore, using the given data:
- Net Income = $180,000
- Total Assets at the beginning of the year = $760,000
- Total Assets at the end of the year = $920,000
- Average Total Assets = ($760,000 + $920,000) / 2 = $840,000
- ROA = (Net Income / Average Total Assets) × 100
- ROA = ($180,000 / $840,000) × 100 = 21.4%
Therefore, the correct answer is B. 21.4%%.
Return on assets is a metric that indicates a company's profitability in relation to its total assets. ROA can be used by management, analysts, and investors to determine whether a company uses its assets efficiently to generate a profit. You can calculate a company's ROA by dividing its net income by its total assets.