Question

Boaz Company had beginning of year assets of $100 million and end of year assets of $120 million. Boaz's net income is $5 million. Calculate Boaz Company's return on assets.

Answer 1

ROA=net income÷average assets

ROA=5÷((120+100)÷2)=0.0455

ROA=0.0455×100=4.55%

GOOD LUCK!

Answer 2

The return on assets of Boaz Company is 4.5%

Explanation:

Returns on assets is the calculation of the company’s Earnings before interest and tax (EBIT). The mathematical representation of return on assets is,

$\text {Return on Assets }(\mathrm{ROA})=\frac{\text { Net income }}{\text { Average total assets }}$

Given, Net income = 5 million $

Total assets in the beginning of the year = 100 million $ and Total assets in the end of the year = 120 million $

$\text {Average total assets}=\frac{100+120}{2}=110$

$R O A=\frac{5}{110} \times 100=4.5 \%$

The return on assets of Boaz Company is 4.5%