Question

Dawson Electronic Services had revenues of $98,000 and expenses of $59,000 for the year. Its assets at the beginning of the year were $409,000. At the end of the year assets were worth $459,000. Calculate its return on assets.

Answer 1

To calculate the return on assets (ROA), we use the formula: ROA = Net Income / Average Total Assets. Net income is the difference between revenues and expenses, so in this case, it would be $39,000. Average total assets can be calculated by taking the average of the beginning and ending assets, so in this case, it would be $434,000. Therefore, the return on assets for Dawson Electronic Services is 9%.

Step-by-step explanation:

To calculate the return on assets (ROA), we use the formula: ROA = Net Income / Average Total Assets. Net income is the difference between revenues and expenses, so in this case, it would be $98,000 - $59,000 = $39,000. Average total assets can be calculated by taking the average of the beginning and ending assets, so in this case, it would be ($409,000 + $459,000) / 2 = $434,000.

Therefore, the return on assets for Dawson Electronic Services is $39,000 / $434,000 = 0.09, or 9%.