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    Jeffrey Company: Calculate net income for the year

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    Last year the return on total assets in Jeffrey Company was 8.5%. The total assets were 2.9 million at the beginning of the year and 3.1 million at the end of the year. The tax rate was 30%, interest expense totaled $110 thousand, and sales were $5.2 million. Net income for the year was:

    A) $145,000
    B) $222,000
    C) $332,000
    D) $178,000

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    Solution Preview

    The formula for ROA (return on assets) is

    Net income + interest expense
    ------------------------------------- = ROA
    Total assets

    Total assets are the average of ...

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