Question

Assume MetAmbit Corporation had a net income of $ 2,300 for the year ending December 2016. Its beginning and ending total assets were $ 34,500 and $ 18,500​, respectively. Calculate​ MetAmbit's return on assets​ (ROA). (Round your percentage answer to two decimal​ places.)

Answer 1

The return on asset is 8.67%

Step-by-step explanation:

The formula to compute the return on assets is shown below:

Return on assets = Net income ÷ average total assets

where,

Net income is $2,300

And, the average total assets is computed by

= (Opening balance of total assets + ending balance of total assets) ÷ 2

= ($34,500 + $18,500) ÷ 2

= $53,000 ÷ 2

= $26,500

Now put the values to the above formula

So, the ratio would equal to

= $2,300 ÷ $26,500

= 8.67%