Chou Co. has a net income of $47,000, assets at the beginning of the year are $254,000 and assets at the end of the year are $30

Question

Vinvika [58]

3 years ago

11

Chou Co. has a net income of $47,000, assets at the beginning of the year are $254,000 and assets at the end of the year are $30

4,000. Compute its return on assets.

Business

1 answer:

Alina [70] · Answer 1 · 2022-04-26T14:59:12+03:00

Answer:

Return on assets=28.54%

Explanation:

<em>Return on asset is the average rate of return generated by the asset investment of a business. It is the net income earned as a proportion of the average investment.</em>

Return on assets = net income / Average assets× 100

Average asset value = (opening balance + closing balance of assets)/2

=( 254,000 + 304,000)/2= 164700

Return on assets = 47,000/164,700 × 100 =28.54%

Return on assets=28.54%