Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios. The return on assets for Cane Construction is
A)80 percent.
B)70 percent.
C)36 percent.
D)133 percent.

Question

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios.   The return on assets for Cane Construction is
A)80 percent. 
B)70 percent. 
C)36 percent. 
D)133 percent.

Quizplus · Accepted Answer

Return on assets (ROA) = Net income / Average total assets 
Average total assets = (Beginning total assets + Ending total assets) / 2 
Average total assets = (150,000 + 300,000) / 2 = 225,000 
ROA = 80,000 / 225,000 = 0.36 = 36% 
Therefore, the answer is C.

Use This Balance Sheet and Income Statement for the First