Question

5. What is the net return on assets for a hotel that generated total revenue of $4,076,000 in 2006 based on total assets of $7,694,748? The property’s net income was $298,300 with a GOP of $1,892,900. In 2005, the hotel achieved total revenue of $3,864,000, and net income was $309,120 with a GOP of $1,159,200 based on total assets of $6,925,273.

Answer 1

Answer:

2016 net return on assets is 3.88%

2015 net return on assets is 4.46%

Explanation:

The net return on  assets is a profitability ratio that compares net income of a business with the capital assets (fixed assets used in generating such net income,hence it is a comparative performance metric not an absolute like net income as it a profit figure might be misleading if not viewed viz-a-viz the amount of resources deployed to generating it.

net return on assets=net income/total assets:

2016:

net income is $298,300

total assets is  $7,694,748

Net return on assets=$298,300/ $7,694,748=3.88%

2015:

net income is $309,120

total assets is  $6,925,273

Net return on assets=$309,120/$6,925,273=4.46%