Abbe Company reported the following financial numbers for one of its divisions f

Question

Abbe Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,270,000; sales of $4,695,000; cost of goods sold of $2,720,000; and operating expenses of $1,542,000. Compute the division's return on assets:

15.92%.

5.84%.

10.14%.

21.92%.

9.22%.

Abbe Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,270,000; sales of $4,695,000; cost of goods sold of $2,720,000; and operating expenses of $1,542,000. Compute the division's return on assets:

Explanation / Answer

Net operating Income = Sale - cost of goods sold - operating expenses

Net operating Income = 4695000-2720000-1542000

Net operating Income = 433000

Division's return on assets = Net operating Income/average total assets

Division's return on assets = 433000/4270000

Division's return on assets = 10.14%

Answer

10.14%.

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