Question

The balance sheet of ABC reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year, respectively. Net income and sales for the year are $240,000 and $2,000,000, respectively. What is ABC's return on assets (round to nearest whole percentage, just put in the number with no %)

Answer 1

15%

Step-by-step explanation:

Average Assets = (Opening asset + Closing asset) / 2

Average Assets = ($1,500,000 + $1,700,000) / 2

Average Assets = $3,200,000 / 2

Average Assets = $1,600,000

Return on assets = Net Income / Average assets

Return on assets = $240,000 / $1,600,000

Return on assets = 0.15

Return on assets = 15%