Question

A company reports the following income statement and balance sheet information for the current year:

Net income	$424,000
Interest expense	80,000
Average total assets	4,200,000

Determine the return on total assets. (Round percentages to one decimal place.)
___________%

Answer 1

Return on total assets = (Net Income/Average total assets)*100
Return on total assets = (424000/4200000)*100
Return on total assets = 10.0952%
Return on total assets = 10.1% Approx. Rounded to one decimal

Answer 2

Return on total assets =   (Net income + Interest expenses) / Average assets * 100
		($424,000 + $80,000) / $4,200,000 * 100
		$504,000 / $4,200,000 * 100

                                                            = 12%