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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Return on total assets

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

Net income $ 250,000
Interest expense 100,000
Average total assets 2,500,000

Determine the return on total assets. Round percentage to one decimal place.

To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

To compute: Return on total assets

Given info: Net income, interest expense, and average total assets.

Explanation

Return on assets determines the particular company’s overall earning power. It is determined by dividing sum of net income and interest expense and average total assets.

Formula:

Rate of return&#

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