Question

Peartree Inc. provides the following​ data: 2015 2014 Cash ​$40,000 ​$25,000 Accounts​ Receivable, Net ​98,000 ​62,000...

Peartree Inc. provides the following​ data:

2015

2014

Cash

​$40,000

​$25,000

Accounts​ Receivable, Net

​98,000

​62,000

Merchandise Inventory

​70,000

​50,000

​Property, Plant, and​ Equipment, Net

​180,000

​120,000

Total assets

​$388,000

​$257,000

Additional​ information:

Net sales

​$500,000

Cost of Goods Sold

​150,000

Interest expense

​20,000

Net income

​180,000

Calculate the return on total assets for the year 2015.

A.

​67.25%

B.

​72.36%

C.

​65.00%

D.

​62.02%

Homework Answers

Answer #1

Correct answer---(D) 62.02%

Calculation of EBIT

Net income

$      1,80,000.00

Add: Interest Expense

$         20,000.00

EBIT or Earnings before interest and taxes

$      2,00,000.00

Return On Assets

Numerator

Denominator

EBIT

Total average assets

$    2,00,000.00

$      3,22,500.00

62.02%

Average assets= (388000+257000)/2

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