What is the return on assets ratio if the new income is $57,000 and the total assets are $204,000?

What is the return on assets ratio if the new income is $57,000 and the total assets are $204,000?

• A. 0.389
• B. 0.279
• C. 0.150
• D. 0.230

Answer: (B)

To determine the return on assets (ROA) ratio, you use the formula: \[ \text{ROA} = \frac{\text{Net Income}}{\text{Total Assets}} \] In this case, the net income is $57,000 and the total assets are $204,000. Plugging these values into the formula gives us: \[ \text{ROA} = \frac{57,000}{204,000} \] Calculating this provides: \[ \text{ROA} = 0.2794 \] Rounding this results in an ROA of approximately 0.279. This ratio indicates how efficiently a company is using its assets to generate earnings. A return on assets ratio of 0.279 suggests that for every dollar of assets, the company earns approximately 27.9 cents, reflecting a reasonable level of efficiency in asset utilization. While the other options represent different ratios that may arise from other calculations or interpretations, the specific calculation performed here clearly leads to the return on assets ratio of 0.279, making it the appropriate choice.

To determine the return on assets (ROA) ratio, you use the formula:

[ \text{ROA} = \frac{\text{Net Income}}{\text{Total Assets}} ]

In this case, the net income is $57,000 and the total assets are $204,000. Plugging these values into the formula gives us:

[ \text{ROA} = \frac{57,000}{204,000} ]

Calculating this provides:

[ \text{ROA} = 0.2794 ]

Rounding this results in an ROA of approximately 0.279.

This ratio indicates how efficiently a company is using its assets to generate earnings. A return on assets ratio of 0.279 suggests that for every dollar of assets, the company earns approximately 27.9 cents, reflecting a reasonable level of efficiency in asset utilization.

While the other options represent different ratios that may arise from other calculations or interpretations, the specific calculation performed here clearly leads to the return on assets ratio of 0.279, making it the appropriate choice.