Abbe Company reported the following financial numbers for one of its divisions f
ID: 2493738 • Letter: A
Question
Abbe Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,270,000; sales of $4,695,000; cost of goods sold of $2,720,000; and operating expenses of $1,542,000. Compute the division's return on assets:
15.92%.
5.84%.
10.14%.
21.92%.
9.22%.
Abbe Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,270,000; sales of $4,695,000; cost of goods sold of $2,720,000; and operating expenses of $1,542,000. Compute the division's return on assets:
Explanation / Answer
Net operating Income = Sale - cost of goods sold - operating expenses
Net operating Income = 4695000-2720000-1542000
Net operating Income = 433000
Division's return on assets = Net operating Income/average total assets
Division's return on assets = 433000/4270000
Division's return on assets = 10.14%
Answer
10.14%.