FastForward has net income of $18,955 and assets at the beginning of the year of $200,000.Its assets at the end of the year total $246,000.Compute its return on assets.
A)7.7%
B)8.5%
C)9.5%
D)11.8%
E)13.0%

Question

Quizplus · Accepted Answer

Return on assets is calculated as Net Income divided by Average Total Assets. Average Total Assets = (Beginning Assets + Ending Assets) / 2 = ($200,000 + $246,000) / 2 = $223,000. Return on Assets = $18,955 / $223,000 = 0.085 or 8.5%.

FastForward Has Net Income of $18,955 and Assets at the Beginning