   Chapter 17, Problem 17.9BPE

Chapter
Section
Textbook Problem

Return on total assetsA company reports the following income statement and balance sheet information for the current year: Net income \$ 410,000 Interest expense 90,000 Average total assets 5,000,000 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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