Question

5) Calculate the return on assets for a sporting goods store that has total assets of $410,000, current assets of $74,000, total liabilities of $280,000, accounts receivable of $12,000, net sales of $64,000, and operating profit margin of $30,000. A. 26.5 percent B. 7.3 percent ..C.25.0 percent D. 18.3 percent E. 8.2 percent 6) An appliance store has total assets of $2,800,000, accounts receivable of $900,000, accounts payable of $700,000, inventory valued at $1,500,000, and total liabilities of $2,500,000. In 1999, its net sales were $2,100,000, and its operating profit margin equaled $42,000. Calculate the store's return on assets. A. 2.8 percent B. 71.4 percent C. 75 percent D. 7.5 percent E. 1.5 percent

Answer 1

Answer of Part 5: The correct answer is B I.e. 7.3%

Return on Assets = Operating Profit Margin / Total Assets * 100
Return on Assets = $30,000 / $410,000 * 100
Return on Assets = 7.3%

Answer of Part 6: The correct answer is E i.e. 1.5%

Return on Assets = Operating Profit Margin / Total Assets * 100
Return on Assets = $42,000 / $2,800,000 * 100
Return on Assets = 1.5%