Question

The following data pertain to Cowl, Inc., for the year ended December 31, 2004: Net sales $ 600,000 Net income 150,000 Total assets, January 1, 2004 2,000,000 Total assets, December 31, 2004 3,000,000 What was Cowl's rate of return on assets for 2004?

Answer 1

Cowl's rate of return on assets is 6%

Step-by-step explanation:

given data

Net sale = $ 600,000

Net income = 150,000

Total assets = 2,000,000

Total assets = 3,000,000

solution

we get here Rate of return on assets that is express as

Rate of return on assets = net income divided by the average total asset ........................1

here average total asset =
`(2,000,000+3,000,000)/(2)` = $2,500,000

put here value and we get

Rate of return on assets =
`(150,000)/(2,500,000)`

Rate of return on assets = 6.0%

so here Cowl's rate of return on assets is 6%