Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios.

-The return on assets for Cane Construction is
A)80 percent.
B)70 percent.
C)36 percent.
D)133 percent.

Question

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios.

-The return on assets for Cane Construction is

-The return on assets for Cane Construction is
A)80 percent. 
B)70 percent. 
C)36 percent. 
D)133 percent.

Quizplus · Accepted Answer

Return on assets (ROA) is calculated by dividing net income by average total assets. 
ROA = Net Income / Average Total Assets 
For Cane Construction, 
Average total assets = (Beginning total assets + Ending total assets) / 2 
= (100,000 + 200,000) / 2 
= 150,000 
ROA = 36,000 / 150,000 
= 0.24 or 24% 
Therefore, the correct option is C, 36 percent.

Use This Balance Sheet and Income Statement for the First