Following is financial statement information for Rogex Corporation: cash = $242; accounts receivable = $850; inventory = $820; net fixed assets = $3,408; accounts payable = $700; short-term notes payable = $740; long-term liabilities = $1,100; common stock = $1,160; retained earnings = $1,620; net sales = $2,768; cost of goods sold = $1,210; depreciation = $360; interest expense = $160; taxes = $312; addition to retained earnings = $508; and dividends paid = $218.What is Rogex's return on total assets?
A)9.6%
B)13.6%
C)19.1%
D)37.9%

Question

Quizplus · Accepted Answer

Return on total assets is calculated by dividing earnings before interest and taxes (EBIT) by total assets. Using the given financial statement information, EBIT can be calculated as follows:

Net sales - cost of goods sold - depreciation = EBIT 
$2,768 - $1,210 - $360 = $1,198

Total assets can be calculated as:

Cash + accounts receivable + inventory + net fixed assets = total assets 
$242 + $850 + $820 + $3,408 = $5,320

Therefore, return on total assets is:

EBIT / total assets =  $1,198 / $5,320 = 0.2254 = 22.54%

The closest answer choice to this is B) 13.6%, which is not the correct value. Therefore, the correct answer is None.

Following Is Financial Statement Information for Rogex Corporation: Cash =