204,000 other income Compute the return on investment for 2011: a. 2.77% b. 4.93

Question

204,000

other income

Compute the return on investment for 2011:

a.

2.77%

b.

4.93%

c.

5.72%

d.

5.61%

e.

None of the answers is correct.

2012 2011 2010 Net sales 233,000

204,000

cost of sales (124,000) (110,000) selling and admin expenses (95,000) (81,500)

other income

interest (3,700) (3,050) other 100 1175 earnings before tax and extraordinary credit 10,400 10,625 provision for income tax (4,800) (4,740) earnings before extraordinary credit 5,600 5,885 extraordinary credit - 1,510 net income 5,600 7,395 total assets 202,000 173,000 161,000 long-term debt 24,600 17,400 15,200 common equity 123,000 116,800 112,800 preffered stock 4,000 4,000 4,000 prefferred dividends 280 280 280

Explanation / Answer

For 2011 Return on Investment= EBIT/Average Operating assets (204000-110000-81500)/((173000+161000)/2)*100 7.48503 Other way to calcuate ROI Net Income/Total Assets 5885/173000*100 3.40 This is alo not in the option Ans e None of the answer is correct

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