Calculate Company Y's return on assets based on the following information for the current year: (Round your final answer to two decimal places.)

$\begin{array} { | l | r | }
\hline \text { Net income } & \$ 800,000 \
\hline \text { Assets at the beginning of the year } & \$ 100,000 \
\hline \text { Assets at the end of the year } & \$ 120,000 \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$

Question

Calculate Company Y's return on assets based on the following information for the current year: (Round your final answer to two decimal places.)

$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 800,000 \
\hline \text { Assets at the beginning of the year } & \$ 100,000 \
\hline \text { Assets at the end of the year } & \$ 120,000 \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$

Quizplus · Accepted Answer

Return on Assets (ROA) is calculated as Net Income divided by Average Total Assets. Average Total Assets = (Assets at the beginning of the year + Assets at the end of the year) / 2 = ($100,000 + $120,000) / 2 = $110,000. ROA = Net Income / Average Total Assets = $800,000 / $110,000 = 7.27 (rounded to two decimal places).

Calculate Company Y's Return on Assets Based on the Following