Question

Rosita's Restaurante has sales of $4,500, total debt of $1,300, total equity of $2,400, and a profit margin of 5 percent. What is the return on assets?

Answer 1

Answer:

6.08%

Explanation:

Rosita's restaurant has a sales of $4,500

The total debt is $1,300

The total equity is $2,400

The profit margin is 5%

=5/100

= 0.05

Therefore the return on assets can be calculated as follows

= profit margin×sales/total debt +total equity

= 0.05×$4,500/($1,300+$4,200)

= 225/3,700

= 0.0608×100

= 6.08%

Hence the return on assets is 6.08%