Excerpts from Goodrow Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $5.34 per share.
-The return on total assets for Year 2 is closest to:
A)5.74%
B)7.46%
C)7.40%
D)5.79%

Question

Excerpts from Goodrow Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $5.34 per share.
-The return on total assets for Year 2 is closest to:
A)5.74% 
B)7.46% 
C)7.40% 
D)5.79%

Quizplus · Accepted Answer

Adjusted net income = Net income + [Interest expense F1F1F1S1F1F1F10 (1-Tax rate)]
= $70 + [$29 F1F1F1S1F1F1F10 (1 - 0.30)] = $90.3
Average total assets = ($1,220 + $1,200)F1F1F1S1F1F1F10 2 = $1,210
Return on total assets = Adjusted net income F1F1F1S1F1F1F10 Average total assets
= $90.3 F1F1F1S1F1F1F10 $1,210 = 7.46%

Excerpts from Goodrow Corporation's Most Recent Balance Sheet and Income