Question

Use the following selected 2019 balance sheet and income statement information for Homer Glen Supply Co. (in millions) to compute the return on assets to the nearest hundredth. Net income Gross profit on sales Average total assets Sales Tax rate on operating profit $104,940 $1,050,600 $631,051 $2,304,756 35%.

a. 4.42%
b. 16.63%
c. 14.83%
d. 22.78%

Answer 1

b. Return on Assets is 16.63%

Step-by-step explanation:

The return on assets is a profitability measure that shows the effectiveness of management in utilizing the company's assets to generate income.

The return on assets is calculated using the following formula,

Return on Assets = Net Inocme / Average Total Assets

Here,

Net Income = $104940

Average Total Assets = $631051

So,

Return on Assets = 104940 / 631051

Return on Assets = 0.16629 or 16.629% rounded off to 16.63%