Question

Category	Prior year	Current year
Accounts payable	41,400	45,000
Accounts receivable	115,200	122,400
Accruals	16,200	13,500
Additional paid in capital	200,000	216,660
Cash	???	???
Common Stock @ par value	37,600	42,000
COGS	131,400	178,722.00
Depreciation expense	21,600	22,610.00
Interest expense	16,200	16,173.00
Inventories	111,600	115,200
Long-term debt	135,000	138,719.00
Net fixed assets	375,126.00	399,600
Notes payable	59,400	64,800
Operating expenses (excl. depr.)	50,400	69,866.00
Retained earnings	122,400	136,800
Sales	255,600	337,317.00
Taxes	9,900	18,792.00

What is the current year's return on assets (ROA)?

Answer 1

Return on assets = net income/ total assets

Total assets equals total liabilities and equity:

Account	Current year
Liabilities and equity
Accounts payable	$          45,000
Accruals	$          13,500
Additional paid in capital	$        216,660
Common stock	$          42,000
Current portion of LT debt
Long term debt	$        138,719
Note payable	$          64,800
Retained earnings	$        136,800
Total	$        657,479

Net income:
Sales	337,317
Expenses:
COGS	(178,722)
Depreciation	(22,610)
Interest	(16,173)
Operating expenses	(69,866)
Taxes	(18,792)
Net income	31,154
/ total assets	$        657,479
Return on assets	4.74%

Return on assets is 4.74%