Question

Huge Cart Inc. gives you the following information pertaining to the year 2017.

Net sales $850,000
COGS $500,000
Current Assets $500,000
Current Liabilities $250,000
Average Total Assets $1,000,000
Total Liabilities $550,000
Net Income $150,000
The rate of return on assets Huge Cart, Inc. is:-----

Answer 1

The rate of return on assets for Huge Cart, Inc. in 2017 is 15%. For the self-check question, the firm's accounting profit last year is $50,000 after deducting the costs of labor, capital, and materials from the sales revenue.

Step-by-step explanation:

The rate of return on assets (ROA) for Huge Cart, Inc. can be calculated by dividing the Net Income by the Average Total Assets. The formula is ROA = Net Income / Average Total Assets. Using the provided information, the ROA for Huge Cart, Inc. in 2017 is calculated as $150,000 / $1,000,000, which equals 0.15 or 15%.

Regarding the self-check question presented, the firm's accounting profit is calculated by subtracting the sum of labor, capital, and material costs from the sales revenue. So, the firm's accounting profit would be $1,000,000 - ($600,000 + $150,000 + $200,000) which equals $50,000.