The following amounts were taken from the financial statements of Ando Company: $\begin{array}{lrr}&2017&2016\
\text { Total assets } & \$ 800,000 & \$ 1,000,000 \
\text { Net sales } & 720,000 & 650,000 \
\text { Gross profit } & 352,000 & 320,000 \
\text { Net income } & 108,000 & 117,000 \
\text { Weighted average number of } & & \
\quad \text { common shares outstanding } & 90,000 & 90,000 \
\text { Market price of common stock } & \$ 42 & \$ 39
\end{array}$ The return on assets for 2017 is
A) 14%.
B) 12%.
C) 11%.
D) 6%.

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated as Net Income divided by Average Total Assets. For 2017, ROA = $ \frac{108,000}{\frac{800,000 + 1,000,000}{2}} = \frac{108,000}{900,000} = 12\% $.

The Following Amounts Were Taken from the Financial Statements of Ando