Given:
Net income = $19,090
Assets at the beginning of the year = $209,000.
Assets at the end of the year total = $264,000.
To find:
The return on assets.
Solution:
Formula used:
[tex]\text{Return of assets}=\dfrac{\text{Net income}}{\text{Average of assets at the beginning and at the end}}[/tex]
Using the above formula, we get
[tex]\text{Return of assets}=\dfrac{19090}{\dfrac{20900+264000}{2}}[/tex]
[tex]\text{Return of assets}=\dfrac{19090}{\dfrac{473000}{2}}[/tex]
[tex]\text{Return of assets}=\dfrac{19090}{236500}[/tex]
[tex]\text{Return of assets}\approx 0.0807[/tex]
The percentage form of 0.0807 is 8.07%.
Therefore, the return on assets is 8.07%.
