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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Twenty metrics of liquidity, solvency, and profitability

The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8


Instructions

Return on total assets

To determine

Concept Introduction:

Return on total Assets:

The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:

  Return on assets = Net incomeAverage Total Assets 

Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:

  Average total Assets = (Beginning total assets + Ending total assets)2 

To Calculate:

The returns on total assets.

Explanation

The Return on Total Assets is calculated as follows:

    20Y8
    Net Income (A) $ 900,000
    Beginning Total Assets (B) $ 8,755,0...

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