Question

Assume metro corporation had a net income of $ 2 comma 400 for the year ending december 2018. its beginning and ending total assets were $ 30 comma 500 and $ 20 comma 000​, respectively. calculate​ metro's return on assets​ (roa). (round your percentage answer to two decimal​ places.)

Answer 1

We have:

Net Income = 2,400

Beginning total assets = 30,500

Ending total assets = 20,000

Return on asset is net income divided by average total assets.

Average total assets = ( beginning total assets + ending total assets)/2

= (30500 +20000)/2

= 25,250

Return on asset = net income/ average total assets

= 2400 /25250

=9.50%

Therefore, Return on asset would be 9.50%.