What is the rate earned on total assets for this company?
-The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.
A) 8.1%
B) 6.8%
C) 10.5%
D) 16.1%

Question

What is the rate earned on total assets for this company?
-The following information pertains to Newman Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.
A) 8.1% 
B) 6.8% 
C) 10.5% 
D) 16.1%

Quizplus · Accepted Answer

The rate earned on total assets is calculated by dividing the net income by the average total assets. Using the figures given, we have:
Net income = $139,200
Average total assets = ($1,080,000 + $810,000) / 2 = $945,000
Rate earned on total assets = $139,200 / $945,000 = 0.1467 = 14.67%
Therefore, the closest answer is A) 8.1%.

What Is the Rate Earned on Total Assets for This