Charmed Inc. has net income of $50,000, sales of $250,000, beginning total assets of $150,000 and ending total assets of $200,000. The return on assets is (rounded)33%.

Question

Quizplus · Accepted Answer

The return on assets (ROA) is calculated as net income divided by the average total assets. Average total assets = (Beginning total assets + Ending total assets) / 2 = ($150,000 + $200,000) / 2 = $175,000. ROA = Net income / Average total assets = $50,000 / $175,000 = 0.2857 or 28.57% when rounded.