A business reports the following in its financial statements:
$$\begin{array} { l l }
\text { Net profit before tax } & \$ 150 \
\text { Interest expense } & 20 \
\text { Income tax expense } & 30 \
\text { Total assets at the beginning of the year } & 700 \
\text { Total assets at the end of the year } & 850
\end{array}$$
Its rate of return on total assets is:
A) 19.4%
B) 21.9%
C) 16.8%
D) 4.83%

Question

A business reports the following in its financial statements:
$$\begin{array} { l l } 
\text { Net profit before tax } & \$ 150 \
\text { Interest expense } & 20 \
\text { Income tax expense } & 30 \
\text { Total assets at the beginning of the year } & 700 \
\text { Total assets at the end of the year } & 850
\end{array}$$
Its rate of return on total assets is:
A) 19.4%
B) 21.9%
C) 16.8%
D) 4.83%

Quizplus · Accepted Answer

Rate of return on total assets is calculated by dividing net income by total assets. Here, net income is $108,750 and total assets are $497,250. So, Rate of return on total assets = ($108,750 ÷ $497,250) * 100 = 21.9%. Therefore, option B is the correct answer.

A Business Reports the Following in Its Financial Statements Its Rate of Return on Total Assets Is: A) 19

A Business Reports the Following in Its Financial Statements Its Rate of Return on Total Assets Is:
A) 19