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QuestionCalculate Rosalind Company's return on assets given revenues of \$111,500, expenses of \$92,545, and assets of \$200,000 and \$246,000.

Studdy Solution

STEP 1

Assumptions1. The company's revenues for the year is \$111,500. The company's expenses for the year is \$92,5453. The company's net income for the year is \$18,9554. The company's assets at the beginning of the year totaled \$200,0005. The company's assets at the end of the year totaled \$246,000

STEP 2

The return on assets (ROA) is calculated by dividing the net income by the average total assets for the year.
ROA=Net IncomeAverage Total AssetsROA = \frac{Net\, Income}{Average\, Total\, Assets}

STEP 3

First, we need to calculate the average total assets for the year. This is done by adding the total assets at the beginning of the year to the total assets at the end of the year, and then dividing by2.
Average Total Assets=Total Assetsbeginning+Total Assetsend2Average\, Total\, Assets = \frac{Total\, Assets_{beginning} + Total\, Assets_{end}}{2}

STEP 4

Plug in the values for the total assets at the beginning and end of the year to calculate the average total assets.
Average Total Assets=$200,000+$246,0002Average\, Total\, Assets = \frac{\$200,000 + \$246,000}{2}

STEP 5

Calculate the average total assets for the year.
Average Total Assets=$200,000+$246,0002=$223,000Average\, Total\, Assets = \frac{\$200,000 + \$246,000}{2} = \$223,000

STEP 6

Now that we have the average total assets, we can calculate the return on assets (ROA). Plug in the values for the net income and the average total assets into the ROA formula.
ROA=$18,955$223,000ROA = \frac{\$18,955}{\$223,000}

STEP 7

Calculate the return on assets (ROA).
ROA=$18,955$223,000=0.085ROA = \frac{\$18,955}{\$223,000} =0.085

STEP 8

To express the return on assets (ROA) as a percentage, multiply the decimal by100.
ROA=0.085times100%ROA =0.085 \\times100\%

STEP 9

Calculate the return on assets (ROA) as a percentage.
ROA=.085times100%=8.5%ROA =.085 \\times100\% =8.5\%The company's return on assets for the year is8.5%.

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