Question

Kyzera manufactures, markets, and sells cellular telephones. The average total assets for Kyzera is $250,000. In its most recent year, Kyzera reported net income of $65,000 on revenues of $475,000.
Required:
1. What is Kyzera’s return on assets?
2. Does return on assets seem satisfactory for Kyzera given that its competitors average a 12% return on assets?
3. What are total expenses for Kyzera in its most recent year?
4. What is the average total amount of liabilities plus equity for Kyzera?

The average total assets for kyzera is 250000 in its most
Accounting Basics

Answer 1

Answer:

1. 26%

2. YES

3. $410,000

4. $250,000

Explanation:

1. Return on Assets = Net Profits/ Total Assets = 65,000/250,000 = 26%

2. Return on Assets should be beyond satisfactory for Kyzera because its performance is better than that of the industry average which is 12%

3. Total expenses for Kyzera can be derived from the formula: Total Revenue - Total Expenses = Net Profit.

Therefore 475,000 - Total expenses = 65,000.

Total expenses = 475,000 - 65,000 = $410,000

4. The average total amount of liabilities plus equity can be derived from the balance sheet equation that states that TOTAL ASSETS = EQUITY+LIABILITIES.

Therefore liabilities plus equity = $250,000