Floyd's income statement for the current year showed operating profits of $45,000, and his balance sheet showed total assets of $300,000. His return on assets is _____ percent.

Question

Quizplus · Accepted Answer

Return on assets (ROA) is a profitability ratio that measures the amount of operating profit generated per dollar of assets. ROA is calculated by dividing operating profit by total assets.

ROA = Operating profit / Total assets

In this case, Floyd's operating profit is $45,000 and his total assets are $300,000. Therefore, his ROA is:

ROA = $45,000 / $300,000 = 0.15 or 15%

Therefore, the answer is B) 15.

Floyd's Income Statement for the Current Year Showed Operating Profits