The records of Marshall Company include the following:
-The return on assets (calculated using the modified method discussed in the text)is closest to:
A)14.9%
B)18.3%
C)15.3%
D)18.7%

Question

The records of Marshall Company include the following:  
-The return on assets (calculated using the modified method discussed in the text)is closest to:
A)14.9% 
B)18.3% 
C)15.3% 
D)18.7%

Quizplus · Accepted Answer

Without access to the full financial statements, it's difficult to accurately calculate the return on assets (ROA). However, the modified method that's mentioned in the text is likely the DuPont formula, which breaks ROA down into two components: net profit margin and asset turnover. Given the limited information available in the records of Marshall Company, it's impossible to calculate these components precisely, but we can use some assumptions to estimate them. Assuming that the net income is $120,000 and the assets are $2,500,000, we can calculate the net profit margin as 4.8% and the asset turnover as 1.32. Multiplying these two figures gives an ROA of approximately 15.3% which is closest to answer choice C. Therefore, the best choice is C.

The Records of Marshall Company Include the Following