Selected financial data from the June 30 year-end statements of Safford Company

ID: 2491700 • Letter: S

Question

Selected financial data from the June 30 year-end statements of Safford Company are given below:

Total assets at the beginning of the year were $5,400,000; total stockholders’ equity was $2,300,000. The company’s tax rate is 35%.

Compute the return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Compute the return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Selected financial data from the June 30 year-end statements of Safford Company are given below:

Answer:1 Return on Total Assets=(Net income/Average Assets)*100

=(410000/(5400000+5600000)/2)*100

=(410000/5500000)*100

=7.5%

Answer:2 Return on equity=(Net income/Average stockholder equity)*100

=($410000/(2300000+2500000)/2)*100

=17.1%

Answer:3 Positive.

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