Question

flitter reported net income of $22,000 for the past year. at the beginning of the year the company had $209,000 in assets and $59,000 in liabilities. by year end, assets had increased to $309,000 and liabilities were $84,000. calculate its return on assets:

Answer 1

With the help of the given figures, after putting all the figures in the formula that is used for calculating return on assets, the figure that has been arrived at is 8.4%.

What is return on assets?

A return on assets is nothing but a kind of return that has been arrived at or gotten in exchange for the investment that has been made by an individual, a firm, an organization, or anything else. There is an easy way to calculate the return on interest.

There are various types of interest returns, but if it is considered a good return on investment, it should be greater than 5%, whereas if it is considered better, it will be greater than 20%.

Return on Assets =  net income /  [(previous years assets + increased assets )/2]

Return on Assets = $22,000/ [( $209,000 +$309,000 )/2]

Return on Assets =$22,000 / $259,000  = 0.084 = 8.4 %

Thus, return on assets in the given case is 8.4%.

Learn more about return on assets  from here:

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