Doonan Corporation has provided the following financial data from its balance sheet and income statement: The market price of common stock at the end of Year 2 was $4.79 per share. The company's return on total assets for Year 2 is closest to:
A)1.77%
B)2.46%
C)1.80%
D)2.42%

Question

Doonan Corporation has provided the following financial data from its balance sheet and income statement:  The market price of common stock at the end of Year 2 was $4.79 per share. The company's return on total assets for Year 2 is closest to:
A)1.77% 
B)2.46% 
C)1.80% 
D)2.42%

Quizplus · Accepted Answer

Return on total assets = Net income / Average total assets
Average total assets = (Beginning total assets + Ending total assets) / 2
= ($2,612,000 + $2,352,000) / 2
= $2,482,000
Net income = $117,000
Return on total assets = $117,000 / $2,482,000 = 0.0471 or 4.71%
Therefore, the closest option to the return on total assets for Year 2 is option B, 2.46%.

Doonan Corporation Has Provided the Following Financial Data from Its