Glen Acre Wines has sales of $682,100, total debt of $285,000, total equity of $323,900, and a proﬁt margin of 8 %. What is the return on assets?
A) 6.28 %
B) 8.96 %
C) 9.03 %
D) 9.11 %
E) 9.17 %

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated as (Net Income / Total Assets). First, calculate Net Income using the profit margin: Net Income = Sales * Profit Margin = $682,100 * 0.08 = $54,568. Then, calculate Total Assets: Total Assets = Total Debt + Total Equity = $285,000 + $323,900 = $608,900. Finally, ROA = $54,568 / $608,900 = 0.0896 or 8.96%.

Glen Acre Wines Has Sales of $682,100, Total Debt of $285,000