Question

Boaz company had beginning of year assets of $100 million and end of year assets of $120 million. Boaz's net income is $5 million. Calculate boaz company's return on assets. Round your answer to 1 decimal place.

Answer 1

Based on the information given boaz company's return on assets is 4.5%.

Return on assets

Using this formula

Return on assets=Net income/Average total assets

Where:

Net income=$5 million

Average total assets=($120 million+$100 million)/2=$110 million

Let plug in the formula

Return on assets=$5 million/($120 million+$100 million)/2

Return on assets=$5 million/$220 million/2

Return on assets=$5 million/$110 million

Return on assets=0.045×100

Return on assets=4.5%

Inconclusion boaz company's return on assets is 4.5%.

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