The balance sheet of Paradise Pizza reports total assets of $1,500,000 and $1,700,000 at the beginning and end of the year,respectively.Net income and sales for the year are $240,000 and $2,000,000,respectively.What is Paradise Pizza's return on assets?

Question

Quizplus · Accepted Answer

Return on assets (ROA) is calculated as Net Income divided by Average Total Assets. Average Total Assets = ($1,500,000 + $1,700,000) / 2 = $1,600,000. ROA = $240,000 / $1,600,000 = 0.15 or 15%.

The Balance Sheet of Paradise Pizza Reports Total Assets of $1,500,000