This Question: 4 pts 18 of 19 (12 complet Walton, Inc. provides the following da
ID: 2537687 • Letter: T
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This Question: 4 pts 18 of 19 (12 complet Walton, Inc. provides the following data Cash Accounts Receivable, Net Merchandise Inventory Property, Plant, and Equipment, Net Total Assets 20192018 $44,000 $25,000 101,000 62,000 78,00050,000 182,000 120,000 $405,000$257,000 Additional information for the year ending December 31, 2019 Net Credit Sales Cost of Goods Sold Interest Expense Nat Income $550,000 150,000 24,000 184 000 OA. 45.43% B. 62.84% 71.60% C. OD, 51.36% Click to select your answer. O Type here to searchExplanation / Answer
The formula to calculate the percentage of return on total assets is given below
Return on total assets = EBIT / total net assets
Where
EBIT = earnings before interest and tax
Total net assets = gross assets less accumulated depreciation and any allowance for bad debts
First calculate EBIT for 2019 given as below
EBIT = net income + interest
EBIT = $184,000 + $ 24,000
EBIT = $208,000
Total net assets for 2019 = $ 405,000
Return on total assets = EBIT / Total net assets
Return on total assets =( $208,000 / $405,000)x100
Return on total assets = 0.51358024691 x 100
Return on total assets = 51.358024691% or 51.36%(rounding off to 2 decimals)
Answer is D Return on total Assets is 51.36% in 2019
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