Question

Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31, 2017. 2017 2016 Net sales revenue (all credit) $1,800,000 Cost of goods sold 1,040,000 Gross margin 760,000 Selling and general expenses 420,000 Interest expense 60,000 Net income $ 280,000 Current assets $ 100,000 $ 90,000 Long-term assets 830,000 800,000 Total assets $930,000 $890,000 Current liabilities $ 72,000 $ 56,000 Long-term liabilities 204,000 390,000 Common stockholders’ equity 654,000 444,000 Total liabilities and stockholders' equity $930,000 $890,000 Inventory and prepaid expenses account for $50,000 of the 2017 current assets. Average inventory for 2017 is $36,000. Average net accounts receivable for 2017 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2017. The market price per share of common stock is $28 at the end of 2017. The EPS for 2017 is equal to $1.50 per share. Refer to Exhibit 13-1. What is the return on assets for 2017 (rounded to the nearest tenth of a percent)? Group of answer choices 15.6% 51.7% 19.8% 30.8% None of the answer choices is correct.

Answer 1

Return on assets = Net income/Average total assets = 280,000/[(930,000+890,000)/2] = 280,000/910,000 = 30.8% Comment if you face any issues