Rosita's Restaurant has sales of $4,500, total debt of $1,300, total equity of $2,400, and a profit margin of 5%.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: $4,500 * 5% = $225. Total Assets = Total Debt + Total Equity = $1,300 + $2,400 = $3,700. ROA = $225 / $3,700 = 6.08%.

Rosita's Restaurant Has Sales of $4,500, Total Debt of $1,300