The Next Life has sales of $428,300, total assets of $389,100, and a profit margin of 6.2 percent. What is the return on assets?
A) 6.29 percent
B) 6.54 percent
C) 6.83 percent
D) 7.01 percent
E) 7.27 percent

Question

Quizplus · Accepted Answer

The formula for return on assets (ROA) is net income divided by total assets. We can calculate net income by multiplying the sales by the profit margin: 
Net income = $428,300 x 6.2% = $26,573
ROA = $26,573 / $389,100 ≈ 0.0683 or 6.83%.
Therefore, the best choice is C.

The Next Life Has Sales of $428,300, Total Assets of $389,100