An appliance store has total assets of $2,800,000, accounts receivable of $900,000, accounts payable of $700,000, inventory valued at $1,500,000, and total liabilities of $2,500,000. In 1999, its net sales were $2,100,000, and its net profit equalled $42,000. Calculate the store's return on assets.
A) 2.8 percent
B) 71.4 percent
C) 7.5 percent
D) 1.5 percent
E) 75 percent

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated as Net Profit divided by Total Assets. Here, ROA = $42,000 / $2,800,000 = 0.015 or 1.5 percent.

An Appliance Store Has Total Assets of $2,800,000, Accounts Receivable