Speedy has net income of $18,955, and assets at the beginning of the year of $200,000. Assets at the end of the year total $246,000. Compute its return on assets.
A) 7.7%.
B) 13.0%.
C) 8.5%.
D) 9.5%.
E) 11.8%.

Question

Quizplus · Accepted Answer

Return on assets (ROA) = Net Income / Average Total Assets
Average Total Assets = (Beginning Assets + Ending Assets) / 2
Average Total Assets = ($200,000 + $246,000) / 2 = $223,000
ROA = $18,955 / $223,000 = 0.085 or 8.5%.
Therefore, the answer is C.

Speedy Has Net Income of $18,955, and Assets at the Beginning