Question

Selected current year company information follows: Net income $ 15,953 Net sales 712,855 Total liabilities, beginning-year 83,932 Total liabilities, end-of-year 103,201 Total stockholders' equity, beginning-year 198,935 Total stockholders' equity, end-of-year 121,851 The return on total assets is:

Answer 1

Return on total assets =7.09%Explanation:

Return on total asset is the proportion of the total amount invested in assets that is earned as net income. It is a measure of the efficiency of the use of assets to generate profit.

It is calculated as follows:

Return on total assets = Net Profit/Total assets× 100

Note that Total assets = Total liabilities + stockholder's equity

Data:

Total assets = 103,201 + 121,851 = 225,052

Net income = 15,953

Return on total assets = 15,953/225,052 × 100= 7.09%

Return on total assets =7.09%