Neef Corporation has provided the following financial data from its balance sheet and income statement:

-The company's return on total assets for Year 2 is closest to:
A) 0.99%
B) 1.00%
C) 1.85%
D) 1.83%

Question

Neef Corporation has provided the following financial data from its balance sheet and income statement:
  
-The company's return on total assets for Year 2 is closest to:
A) 0.99% 
B) 1.00% 
C) 1.85% 
D) 1.83%

Quizplus · Accepted Answer

Return on total assets = Adjusted net income* ÷ Average total assets**
= $24,050 ÷ $1,316,000 = 1.83% (rounded)
*Adjusted net income = Net income + [Interest expense × (1 - Tax rate)]
= $13,000 + [$17,000 × (1 - 0.35)] = $24,050
**Average total assets = ($1,302,000 + $1,330,000) ÷ 2 = $1,316,000

Neef Corporation Has Provided the Following Financial Data from Its