API, Inc., had annual sales of $1,590,000 and total assets of $832,000. What is the return on assets if the profit margin is 10.5%?
A)18.56%
B)19.88%
C)20.07%
D)20.22%
E)21.58%

Question

Quizplus · Accepted Answer

The formula for return on assets (ROA) is:
ROA = Net Income/Total Assets
We know that the profit margin is 10.5%, which means that Net Income/Sales = 0.105
Therefore, we can calculate the net income as follows:
Net Income = Profit Margin x Sales
Net Income = 0.105 x $1,590,000
Net Income = $166,950
Now we can plug in the values to the ROA formula:
ROA = $166,950/$832,000
ROA = 0.2007 or 20.07% (approx.) 
Therefore, the best choice is option C.

API, Inc, Had Annual Sales of $1,590,000 and Total Assets of of $832,000