Extreme Sports Company and All Sports Corporation. Below is financial information for two sporting goods retailers. Extreme Sports Company operates a retail business and franchising business. At the end 2011, Extreme Sports had 263 Company-owned and 120 franchise-operated retail stores. Extreme's stores are located in suburban, strip mall and regional mall locations, the company operates in 32 states. All Sports Corporation sells sporting goods and related products at over 2,500 Company-operated retail stores.
Selected Data for All Sports and Extreme Sports
(amounts in millions)
$\begin{array}{lll}
&\text { All Sports }&\text { Extreine Sport }\
\text { Sales } & \$ 5,320 & \$ 1,344 \
\text { Cost of GoodsSold } & 3,897 & 887 \
\text { Interest Expense } & 138 & 43 \
\text { Net Income } & 212 & 33 \
\text { Average Inventory } & 998 & 286 \
\text { Average Fixed Assets } & 1,163 & 130 \
\text { Average Total Assets } & 2,472 & 662 \
\text { Average Tax Rate } & 40 \% & 40 \%
\end{array}$
Refer to the information for Extreme Sports Company and All Sports Corporation.
Compute the return on assets for Extreme Sports

Question

Extreme Sports Company and All Sports Corporation. Below is financial information for two sporting goods retailers. Extreme Sports Company operates a retail business and franchising business. At the end 2011, Extreme Sports had 263 Company-owned and 120 franchise-operated retail stores. Extreme's stores are located in suburban, strip mall and regional mall locations, the company operates in 32 states. All Sports Corporation sells sporting goods and related products at over 2,500 Company-operated retail stores.
Selected Data for All Sports and Extreme Sports
(amounts in millions)
$\begin{array}{lll}
&\text { All Sports }&\text { Extreine Sport }\
\text { Sales } & \$ 5,320 & \$ 1,344 \
\text { Cost of GoodsSold } & 3,897 & 887 \
\text { Interest Expense } & 138 & 43 \
\text { Net Income } & 212 & 33 \
\text { Average Inventory } & 998 & 286 \
\text { Average Fixed Assets } & 1,163 & 130 \
\text { Average Total Assets } & 2,472 & 662 \
\text { Average Tax Rate } & 40 \% & 40 \%
\end{array}$
 Refer to the information for Extreme Sports Company and All Sports Corporation.
Compute the return on assets for Extreme Sports

Quizplus · Accepted Answer

Return on Assets (ROA) is calculated as Net Income divided by Average Total Assets. For Extreme Sports, this is $ \frac{33}{662} = 0.0498 $ or 4.98%, which rounds to 5.0%. However, the correct calculation should actually yield a result close to one of the provided options, indicating a possible mistake in the calculation or choice selection. Given the options and the calculation error acknowledgment, the closest correct option based on the provided calculation would be 5.0%, but due to a mistake in rounding or selection, the intended correct answer might be different.

Extreme Sports Company and All Sports Corporation Refer to the Information for Extreme Sports Company and All