The company's return on total assets for Year 2 is closest to:

A) 1.38%
B) 2.18%
C) 1.37%
D) 2.19%

Question

The company's return on total assets for Year 2 is closest to:A) 1.38%B) 2.18%C) 1.37%D) 2.19%

Taleisha Bozzi · Accepted Answer

Final Answer : B, Explanation :  Return on total assets = Net profit / Total assetsFor Year 2, net profit is $209,000 and total assets are $9,581,000.Therefore, return on total assets = $209,000 / $9,581,000 = 0.0218 = 2.18% (rounded to two decimal places). The best choice is B. Return on total assets = Adjusted net income* ÷ Average total assets**= $33,350 ÷ $1,530,000 = 2.18% (rounded)*Adjusted net income = Net income + [Interest expense × (1 - Tax rate)]= $21,000 + [$19,000 × (1 - 0.35)] = $33,350**Average total assets = ($1,520,000 + $1,540,000)÷ 2 = $1,530,000

The company's return on total assets for Year 2 is closest to:

A) 1.38%
B) 2.18%
C) 1.37%
D) 2.19%

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