Question

Lake inc. and river inc. reported net incomes of $800,000 and $1,000,000 respectively, for the most recent fiscal year. both companies had 200,000 shares of common stock issued for $10 per share, with all shares still outstanding. the market price per share of lake’s stock was $50, while river’s sold for $85 per share. what is lake inc.'s return-on-assets ratio?

Answer 1

To calculate Lake Inc.'s return-on-assets ratio, we need the company's total assets, which is not provided in the question. The ROA is calculated by dividing Net Income by Total Assets, but without the total assets value, the calculation cannot be completed.

Step-by-step explanation:

The student has asked about Lake Inc.'s return-on-assets (ROA) ratio, which measures how efficiently a company can manage its assets to produce net income during a fiscal year. However, it's important to note that to calculate the ROA, we need the total assets of Lake Inc., which are not provided in the question. Return on Assets is calculated by dividing the Net Income by the Total Assets. The formula is as follows:

ROA = Net Income / Total Assets

Without knowing Lake Inc.'s Total Assets, we cannot calculate its ROA. The question provides information on share capital and stock price, yet these are not directly used in calculating ROA. If we had Lake Inc.'s Total Assets, we could simply divide the Net Income of $800,000 by the Total Assets to find the ROA.