Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year. Its assets at the beginning of the year were $400,000. At the end of the year assets were worth $450,000. Calculate its return on assets.

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated as Net Income divided by Average Total Assets. Net Income is $80,000 - $50,000 = $30,000. Average Total Assets = ($400,000 + $450,000) / 2 = $425,000. ROA = $30,000 / $425,000 = 0.0706 or 7.1%.

Dawson Electronic Services Had Revenues of $80,000 and Expenses of $50,000