Question

Suppose in its 2022 annual report that McDonald’s Corporation reports beginning total assets of $29.50 billion, ending total assets of $31.50 billion, net sales of $22.57 billion, and net income of $4.27 billion.
(a) Compute McDonald’s return on assets. (Round return on assets to 2 decimal places, e.g. 5.12%.) McDonald’s return on assets.
Enter McDonald’s return on assets in percentages rounded to 2 decimal places.
(b) Compute McDonald’s asset turnover. (Round asset turnover to 2 decimal places, e.g. 5.12.) McDonald’s asset turnover.
Enter McDonald's asset turnover rounded to 2 decimal places.

Answer 1

Answer:

a. 14%

b. 0.74 times

Explanation:

a. The computation of the return on assets is shown below:

= Net income ÷ average total assets

where,

net income is $4.27 billion

and, the average total assets

= (beginning total assets + ending total assets) ÷ 2

= ($29.50 + $31.50) ÷ 2

= $30.5 billion

Now put these values to the above formula

So, the ratio would equal to

= $4.27 ÷ $30.5

= 14.00%

b.  The computation of the assets turnover is shown below:

= Net sales ÷ average total assets

where,

net income is $22.57 billion

and, the average total assets

= (beginning total assets + ending total assets) ÷ 2

= ($29.50 + $31.50) ÷ 2

= $30.5 billion

Now put these values to the above formula

So, the ratio would equal to

= $22.57 ÷ $30.5

= 0.74 times