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    return on total assets

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    The total assets of the ABC Company on January 1, 19x9 were $2.3 million and on December 31, 19x9 were $2.5 million. Net income for 19x9 was $188,000. Dividends for 19x9 totaled $75,000, interest expenses totaled $70,000, and the tax rate was 30%. The return on total assets for 19x9 was closest to:
    A) 9.5%.
    B) 6.8%.
    C) 9.9%.
    D) 10.8%.

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    Solution Preview

    Please see the attached file.

    Net Income 188,000
    Dividends 75,000
    Interest 70,000
    Taxes 56,400
    EBIT 239,400

    Total Assets
    Beginning of Year 2,300,000
    End of Year 2,500,000
    Average 2,400,000

    ROA 9.98%

    Background info on ROA:

    A ratio that measures a company's earnings before ...

    Solution Summary

    The return on total assets are examined. Interest expense total assets are analyzed.