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miskamm [114]
3 years ago
14

River Corp's total assets at the end of last year were $320,000, dividends paid were $12,000 and its net income was $32,750. Wha

t was its return on total assets
Business
1 answer:
8090 [49]3 years ago
5 0

Answer:

Return on Total Assets = 10.2%

Explanation:

The Return on Total Assets (ROTA) of a company is a ratio of the measure of a company's earnings before income and taxes, relative to its total net assets. Simply put, it is the amount of money a company receives in a financial year, relative to its total assets. The formula for calculating ROTA is given as follows:

ROTA = ( EBIT) ÷ Total Assets

where:

EBIT = Earnings before income and taxes = net income = $32,750

Total Assets = $320,000

∴ ROTA = 32,750 ÷ 320,000 = 0.102

converting 0.102 to percentage, we multiply by 100

∴ ROTA = 0.102 × 100 = 10.2%

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