Abbe Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on assets:
A) 30.3%.
B) 23.6%.
C) 13.3%.
D) 10.4%.
E) 14.7%.

Question

Quizplus · Accepted Answer

Return on Assets (ROA) is calculated as Net Income divided by Average Total Assets. Net Income is Sales minus Cost of Goods Sold (COGS) and Operating Expenses. So, Net Income = $4,525,000 - $2,550,000 - $1,372,000 = $603,000. ROA = ($603,000 / $4,100,000) * 100 = 14.7%.

Abbe Company Reported the Following Financial Numbers for One of Its