Degollado Corporation\'s most recent income statement appears below: Income Stat

Question

Degollado Corporation's most recent income statement appears below: Income Statement For the Year Ended December 31 Sales (all on account) $ 219,000 Cost of goods sold 86,000 Gross margin 133,000 Selling and administrative expenses 60,000 Net operating income 73,000 Interest expense 35,000 Net income before taxes 38,000 Income taxes (30%) 11,400 Net income $ 26,600 The beginning balance of total assets was $224,000 and the ending balance was $243,000. Required: Compute the return on total assets. (Round your "Percentage" answer to 2 decimal places.)

Explanation / Answer

Average total assets = (Beginning total assets + Ending total assets) ÷ 2 = (224,000+243,000)÷2 = 467,000÷2 = $233,500

Net income = $26,600

Return on total assets = Net Income ÷ Average total assets = 26,600÷233,500 = 0.1139 = 11.39%

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