Question

USING ROA FORMULA , ANSWER IS IN % FORM. IM STUMPED. THE ABC COMPANY HAS NET INCOMEO OF $56K, ASSETS AT THE BEGINNING OF THE YEAR ARE $263K, AND ASSETS AT THE END OF YEAR ARE $313K, WHAT IS THE COMPANYS RETURN ON ASSETS?

Answer 1

You need to calculate the average assets in that year, then use the ratio formula:

average assets: (263k+313k)/2 = 288k

ROA = 56k/288k = 0.194...

The company's return on assets is 19.4%