A company reports the following income statement and balance sheet information for the current year

A company reports the following income statement and balance sheet information for the current year:

Net income $   410,000
Interest expense 90,000
Average total assets 5,000,000

Determine the rate earned on total assets.

Answer:

Rate Earned on Total Assets   = Net Income + Interest Expense Average Total Assets Rate Earned on Total Assets   = Rate Earned on Total Assets   =  $410,000 + $90,000 $5,000,000  $500,000 $5,000,000 

A company reports the following income statement and balance sheet information for the current year:

Net income $   250,000
Interest expense 100,000
Average total assets 2,500,000

Determine the rate earned on total assets.

Answer:

Rate Earned on Total Assets   =
Net Income + Interest Expense
Rate Earned on Total Assets   =
Rate Earned on Total Assets   =

$250,000 + $100,000
$2,500,000

$2,500,000
Rate Earned on Total Assets   =  14.0%