The balance sheet of Purdy's BBQ reports total assets of $800,000 and $900,000 at the beginning and end of the year,respectively.Net income and sales for the year are $85,000 and $1,700,000,respectively.What is Purdy's return on assets?
A)10%.
B)20%.
C)200%.

Question

Quizplus · Accepted Answer

Return on Assets (ROA) is calculated as Net Income divided by Average Total Assets. Average Total Assets = ($800,000 + $900,000) / 2 = $850,000. ROA = $85,000 / $850,000 = 0.1 or 10%.

The Balance Sheet of Purdy's BBQ Reports Total Assets of $800,000