The operating profit after tax of Calculus Ltd is $10 million and sales are $100 million.Asset turnover is 1.25 times p.a.What is Calculus Ltd's ROA?
A) 0.0125
B) 0.1
C) 0.125
D) 1.25

Question

Quizplus · Accepted Answer

ROA = operating profit after tax / average total assets
Asset turnover = sales / average total assets
So, average total assets = sales / asset turnover = $100 million / 1.25 = $80 million
Therefore, ROA = $10 million / $80 million = 0.125 or 12.5%. The answer is C.

The Operating Profit After Tax of Calculus Ltd Is $10