F Co had a profit of $100,000 before tax, after deducting $16,000 in interest expense. F Co's liabilities and equity total $1,000,000. Return on total assets, before interest and tax, is:
A) 9%.
B) 10%.
C) 11.6%.
D) 13%.

Question

Quizplus · Accepted Answer

Return on total assets before interest and tax can be calculated as follows:

Return on total assets = (Profit before tax + Interest expense) / Total assets

= (100,000 + 16,000) / 1,000,000

= 0.116 or 11.6%

Therefore, the correct answer is C.

F Co Had a Profit of $100,000 Before Tax, After