A company reports the following income statement and balance sheet information for the current year: Net income

Accounting Jan 22, 2021

A company reports the following income statement and balance sheet information for the current year:
Net income .......$ 820,000
Interest expense ..... 80,000
Average total assets .....5,000,000
Determine the rate earned on total assets.

Expert Solution

Rate Earned on Total Assets = (Net Income + Interest Expense) /

Average Total Assets

Rate Earned on Total Assets = ($820,000 + $80,000) / $5,000,000

Rate Earned on Total Assets = $900,000 / $5,000,000

Rate Earned on Total Assets = 18.0%

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