Question

TigerTT Inc. has sales of $400,700, total debt of $72,400, total equity of $128,500, and profit margin of 8.5 percent. What is the return on assets? Group of answer choices

32.19 percent

26.51 percent

47.04 percent

16.95 percent

Answer 1

Calculation of return on assets:

Return on assets = net income /total assets

Given sales =$400,700

Net income or profit = sales *profit margin

Given profit margin =8.5%

Net income or profit = $400,700*8.5%

Net income or profit = $34,059.5

Given total debt =$ 72,400

Total equity =$128,500

Total liabilities =$72400 + $128500

                           = $ 200,900

As we know total assets = total liabilities

So total assets =$200,900

Return on assets =$34,059.5/$200,900 = 16.95%.

So option d is correct option.