The following information is from the books of Western Corporation:
$$\begin{array} { | l | r | }
\hline \text { Net income } & \$ 170,000 \
\hline \text { Preferred dividends } & 24,000 \
\hline \text { Interest expense } & 17,500 \
\hline \text { Beginning of the year amounts: } & \
\hline \text { Total assets } & 900,000 \
\hline \text { Total liabilities } & 375,000 \
\hline \text { Total common stockholders' equity } & 395,000 \
\hline \text { End of the year amounts: } & \
\hline \text { Total assets } & 930,000 \
\hline \text { Total liabilities } & 405,000 \
\hline \text { Total common stockholders' equity } & 435,000 \
\hline
\end{array}$$ Which of the following is the return on assets for Western Corporation?

Question

The following information is from the books of Western Corporation:
$$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 170,000 \
\hline \text { Preferred dividends } & 24,000 \
\hline \text { Interest expense } & 17,500 \
\hline \text { Beginning of the year amounts: } & \
\hline \text { Total assets } & 900,000 \
\hline \text { Total liabilities } & 375,000 \
\hline \text { Total common stockholders' equity } & 395,000 \
\hline \text { End of the year amounts: } & \
\hline \text { Total assets } & 930,000 \
\hline \text { Total liabilities } & 405,000 \
\hline \text { Total common stockholders' equity } & 435,000 \
\hline
\end{array}$$ Which of the following is the return on assets for Western Corporation?

Quizplus · Accepted Answer

Return on assets = Net income / Average total assetsAverage total assets = (Beginning total assets + Ending total assets) / 2= (900,000 + 930,000) / 2= 915,000Return on assets = 170,000 / 915,000= 0.1859 or 18.59%= 30.0% (rounded to the nearest whole number)

The Following Information Is from the Books of Western Corporation