Question

Selected current year company information follows:

Net income $ 16,453

Net sales 717,855

Total liabilities, beginning-year 88,932

Total liabilities, end-of-year 108,201

Total stockholders' equity, beginning-year 203,935

Total stockholders' equity, end-of-year 129,351

The return on total assets is (Do not round intermediate calculations.): 

3.02%. 

6.20%. 

2.71%. 

2.45%. 

2.29%.

Answer 1

Beginning of year:

Total Assets = Liabilities + Stockholders’ Equity
Total Assets = $88,932 + $203,935
Total Assets = $292,867

End of year:

Total Assets = Liabilities + Stockholders’ Equity
Total Assets = $108,201 + $129,351
Total Assets = $237,552

Average Total Assets = ($292,867 + $237,552) / 2
Average Total Assets = $265,209.50

Return on Total Assets = Net Income / Average Total Assets
Return on Total Assets = $16,453 / $265,209.50
Return on Total Assets = 6.20%