Braverman Corporation's net income last year was $75,000 and its interest expense was $10,000. Total assets at the beginning of the year were $650,000 and total assets at the end of the year were $610,000. The corporation's income tax rate was 30%. The corporation's return on total assets for the year was closest to:
A) 13.5%
B) 12.4%
C) 13.0%
D) 11.9%

Question

Quizplus · Accepted Answer

The return on total assets (ROA) is calculated as (Net Income + Interest Expense * (1 - Tax Rate)) / Average Total Assets. Here, it's ($75,000 + $10,000 * (1 - 0.30)) / (($650,000 + $610,000) / 2) = ($75,000 + $7,000) / $630,000 = $82,000 / $630,000 = 0.13 or 13.0%.

Braverman Corporation's Net Income Last Year Was $75,000 and Its