Question

Speedy has net income of $31,955, and assets at the beginning of the year of $213,000. Assets at the end of the year total $259,000. Compute its return on assets.

Answer 1

13.5%

Return on Assets = Net Income/Average Total Assets
Return on Assets = $31,955/[($213,000 + $259,000)/2]
Return on Assets = $31,955/$236,000 = 0.135 = 13.5%