Flo's Restaurant has sales of $418,000,total equity of $224,400,a tax rate of 23 percent,a debt-equity ratio of .37,and a profit margin of 5.1 percent.What is the return on assets?

Question

Quizplus · Accepted Answer

Return on Assets (ROA) is calculated as Net Income divided by Total Assets. First, calculate Net Income: $418,000 * 5.1% = $21,318. Then, find Total Assets using the debt-equity ratio: Total Equity = $224,400, Debt = 0.37 * $224,400 = $83,028, Total Assets = $224,400 + $83,028 = $307,428. Finally, ROA = $21,318 / $307,428 = 6.93%.

Flo's Restaurant Has Sales of $418,000,total Equity of $224,400,a Tax