At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies.

-Which company has the highest return-on-assets ratio?
A)Grumpy.
B)Happy.
C)Doc.
D)They all have equal return-on-assets ratios.

Question

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies.
 
-Which company has the highest return-on-assets ratio?
A)Grumpy. 
B)Happy. 
C)Doc. 
D)They all have equal return-on-assets ratios.

Quizplus · Accepted Answer

Return-on-assets ratio = Net income ÷ Total assets
Grumpy: $118,000 ÷ $2,000,000 = 6% (rounded)
Happy: $190,000 ÷ $2,000,000 = 10% (rounded)
Doc: $150,000 ÷ $3,000,000 = 5% (rounded)
Happy has the highest return-on-assets ratio.

At the End of Year 1,the Following Information Is Available