Question

#38

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	175,647.00
Depreciation expense	21,600	23,080.00
Interest expense	16,200	16,385.00
Inventories	111,600	115,200
Long-term debt	135,000	139,379.00
Net fixed assets	376,827.00	399,600
Notes payable	59,400	64,800
Operating expenses (excl. depr.)	50,400	68,874.00
Retained earnings	122,400	136,800
Sales	255,600	337,253.00
Taxes	9,900	19,019.00

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

Answer 1

Net income:
Sales	337,253
Expenses:
COGS	(175,647)
Depreciation	(23,080)
Interest	(16,385)
Operating expenses	(68,874)
Taxes	(19,019)
Net income	34,248

Account	Prior year	Current year
Liabilities and equity
Accounts payable	$          41,400	$          45,000
Accruals	$          16,200	$          13,500
Additional paid in capital	$        200,000	$        216,660
Common stock	$          37,600	$          42,000
Current portion of LT debt
Long term debt	$        135,000	$        139,379
Note payable	$          59,400	$          64,800
Retained earnings	$        122,400	$        136,800
Total	$        612,000	$        658,139
Assets:
Accounts receivable	$        115,200	$        122,400
Inventories	$        111,600	$        115,200
Net fixed assets	$        376,827	$        399,600
Total assets with out cash	$        603,627	$        637,200
Cash (a) - (b)	$            8,373	$          20,939

Average total assets = (612000+658139)/2 = 635069.5

Retun on assets:

Net income	34,248
/ Average total assets	635,069.50
Return on assets	5.39%

Answer is 5.39%