Answer:
The ROA is 20%
Explanation:
The Return on Asset is the ratio of a company's net income compared to its asset. It is used to show how profitable the assets a company has is to the company.
mathematically it is represented as;
ROA = (net income) ÷ (total asset)
let us calculate net income first.
net income = 15% on sales of $20,000,000
= 15/100 × 20,000,000
= 0.15 × 20,000,000 = $3,000,000
Asset = Total asset - debt = 22,500,000 - 7,500,000 =$15,000,000
∴ ROA = 3,000,000 ÷ 15,000,000 = 0.2
converting to percentage; 0.2 = 20/100 = 20%
