Question

Assume Metro Corporation had a net income of $2,400 for the year ending December 2018. Its beginning and ending total assets were $30,000 and $19,000, respectively. Calculate Metro's return on assets (ROA). (Round your percentage answer to two decimal places.)

A. 12.63%
B. 4.9%
C. 8%
D. 9.8%

Answer 1

9.8%

Step-by-step explanation:

The return on assets ratio( ROA ) measures the efficiently in which a business manages its assets to generate profits during a period.

The formula for calculating Return on assets is as follows.

return of asset ratio = Net income/ Average Total Assets x 100

For metro corporation:

net income: $ 2,400

Average total assets : = $30,000 +$19,000/2

=$24,500

ROA= $2400/$24500x100

=0.098 x100

=9.8%