Degollado Corporations most recent income statement appears

Degollado Corporation\'s most recent income statement appears below: Income Statement For the Year Ended December 31 Sales (all on account) $ 145,000 Cost of goods sold 65,000 Gross margin 80,000 Selling and administrative expenses 36,000 Net operating income 44,000 Interest expense 15,000 Net income before taxes 29,000 Income taxes (30%) 8,700 Net income $ 20,300 The beginning balance of total assets was $205,000 and the ending balance was $225,000. Required: Compute the return on total assets. (Round your \"Percentage\" answer to 2 decimal places.)

Solution

Beginning Total Assets = $205,000
Ending Total Assets = $225,000

Average Total Assets = ($205,000 + $225,000) / 2
Average Total Assets = $215,000

Return on Total Assets = Net Income / Average Total Assets
Return on Total Assets = $20,300 / $215,000
Return on Total Assets = 9.44%