Answer:
The return on assets is;
e) 10.8%
Explanation:
The return on assets is a measure of how profitable a company is with respect to its total assets. It gives one an idea of how efficient the company's assets are being utilized. It is usually represented as a percentage. In the business sense, efficiency is determined by how much the management utilizes the limited resources to generate revenue. In this way, the return on assets tries to determine how efficient a business utilizes it's assets to generate profits or losses in some cases. The profits or losses are calculated from the net revenue after accounting for all the expenditure.
The return on assets is calculated using the formula below;
ROA=(N.I/T.A)×100... equation 1
where;
ROA=return on assets
N.I=net income
T.A=total assets
In our case;
ROA=unknown
N.I=Total revenue-total expenditure... equation 2
and;
total revenue=$116,000
total expenditure=$68,000
N.1=116,000-68,000=$48,000
Net income=$48,000
Total assets=(Assets at the beginning of the year+assets at the end of the year)/2... equation 3
where;
Assets at the beginning of the year=$418,000
assets at the end of the year=$468,000
replacing;
Total assets=(418,000+468,000)/2=$443,000
Use the values to substitute in equation 1 above;
ROA=(48,000/443,000)×100=10.84%
The return on assets=10.8%
