Question

A company reports the following income statement and balance sheet information for the current year:

Line Item Description Amount
Net income $309,400
Interest expense 54,600
Average total assets 2,600,000
Determine the return on total assets. If required, round the answer to one decimal place.
fill in the blank 1 of 1
%

Answer 1

To calculate the return on total assets (ROA), you can use the following formula:

\[
\text{ROA} = \frac{\text{Net Income}}{\text{Average Total Assets}} \times 100
\]

Given:
- Net Income = $309,400
- Average Total Assets = $2,600,000

Now plug the values into the formula:

\[
\text{ROA} = \frac{309,400}{2,600,000} \times 100
\]

Calculating the fraction:

\[
\text{ROA} = 0.1193076923 \times 100 \approx 11.93\%
\]

Now rounding to one decimal place:

\[
\text{ROA} \approx 11.9\%
\]

So, the return on total assets is **11.9%**.