Question

oo0O 2

Answer 1

Year 1:

Total assets = Total current assets + Total investments + Total property, plant and equipment
Total assets = $586,000 + $54,200 + $746,000
Total assets = $1,386,200

Year 2:

Total assets = Total current assets + Total investments + Total property, plant and equipment
Total assets = $619,500 + $60,800 + $868,200
Total assets = $1,548,500

Average total assets = ($1,386,200 + $1,548,500) / 2
Average total assets = $1,467,350

Return on total assets = (Net income + Interest expense) / Average total assets
Return on total assets = ($101,700 + $38,900) / $1,467,350
Return on total assets = 0.0958 or 9.58%