Business College

CCC Company’s most recent income statement shows (in thousands of dollars) sales $2,000, interest payments $100, and net income $140. Its most recent balance sheet shows (also in thousands of dollars) total debt financing $800. If the total asset turnover ratio computed from the company’s most recent financial statements was 1.5, what would we compute return on assets (ROA) to be? (Hint: you should use the DuPont method of analysis.) A. 4.7% B. 10.5% C. 26.7% D. 18.7% E. 3.0%

Answers

Answer 1

Answer:

B. 10.5%

Explanation:

The computation of the return on assets is shown below:

As we know that

Return on assets = Net income ÷ total assets

where,

Total assets is

Total asset turnover = Sales ÷ Total assets

1.5 = $2,000 ÷ Total assets

So, the total assets is $1,333.33

Now the return on assets is

= $140 ÷ $1,333.33

= 10.5%

Related Questions

You know that one of your shortcomings is that you have no real job experience to speak of. You are considering beefing up your resume by exaggerating the extent of the class project you worked on for a few weeks at your brother-in-law’s small consulting firm. You could reword the resume to make it sound as if you were actually employed there and that your responsibilities were greater than they actually were. What would you do?

Answers

Answer:

Obviously, I will not reword the resume in order make it sound as if I was employed.

Explanation:

Solution:

Obviously, I will not reword the resume in order make it sound as if I was employed.

Because:

1. It is ethically wrong.

2. If I reword the resume, then obviously, I would present fake certificates to the company in order to prove the rewording or exaggerating presenting in the resume.

3. Fake documents and certificates can not be hidden for long.

4. It is really dangerous and illegal to present fake data and certificates. You can get a job on those fake profiles but after some time, chances are very high that you will be caught red handed. And consequently, you can face severe legal proceedings as well.

Hence, I will definitely not exaggerate or reword the resume. Better way is to get an internship experience for free and then provide real certificates to secure a job.  

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