Belfast Water Works had a profit of $300 000 before tax, after deducting $27 000 in interest expense. Belfast's liabilities and equity total $2 725 000. Return on total assets, before finance costs and tax is:

Question

Quizplus · Accepted Answer

To calculate the return on total assets before finance costs and tax, we need to find the total assets. 
Total assets = Liabilities + Equity 
Total assets = $2,725,000 
Return on total assets = (Profit before tax + Interest expense) / Total assets 
Return on total assets = ($300,000 + $27,000) / $2,725,000 
Return on total assets = 11% 
Therefore, the answer is choice B) 11.0%.

Belfast Water Works Had a Profit of $300 000 Before