FPL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their return on assets is:Select one:a.15%b.12.5%c.10%d.9%
Question
FPL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their return on assets is:Select one:a.15%b.12.5%c.10%d.9%
Solution
To calculate the Return on Assets (ROA), we need to know the net income and the total assets of the company.
Step 1: Calculate Net Income Net income is calculated by subtracting the interest expense and tax expense from the operating profit.
Net Income = Operating Profit - Interest Expense - Tax Expense Net Income = 50,000 - 10,000 - 20,000 = 20,000
Step 2: Calculate Total Assets Total assets is the sum of total equity and total debt.
Total Assets = Total Equity + Total Debt Total Assets = 125,000 + 275,000 = 400,000
Step 3: Calculate Return on Assets (ROA) ROA is calculated by dividing the net income by the total assets and then multiplying by 100 to get a percentage.
ROA = (Net Income / Total Assets) * 100 ROA = (20,000 / 400,000) * 100 = 5%
So, none of the options given (a.15%, b.12.5%, c.10%, d.9%) are correct. The Return on Assets (ROA) for FPL Co is 5%.
Similar Questions
FPL Co has current assets of 180,000 (cash: 20,000, accounts receivable: 70,000, inventory: 90,000), and long-term assets that had an amount of 400,000, exclusive of accumulated depreciation worth 180,000. Sales were 500,000, and operating profit was 50,000. Tax was 20,000 and interest paid was 10,000. Their total asset turnover ratio is:Select one:a.1.75b.1.5c.1.25d.2.00
PFL Co has sales of 500,000, operating profit of 50,000, interest expense of 10,000, tax expense of 20,000, total equity of 125,000 and total debt of 275,000. Their return on equity is:Select one:a.16%b.10%c.12%d.18%
If profit is $21,000, after deducting interest of $5,000, and average total assets are $150,000, calculate return on assets to assess profitability from a management viewpoint.Group of answer choices1.73%173%5.77%17.3%
Fynna limited reported a profit before tax of 200,000 cedis. The profit was arrived at after considering; provision for doubtful debt of 15000 cedis, Specific bad debt written off 2,000 cedis, depreciation 5000, financial gain 20,000, financial cost 30,000. Capital allowance of 5,000. Calculate the Adjusted Chargeable income of the company? A. 230,000 cedis B. 225,000 cedis C. 235,000 cedis D. 240,000 cedis E. 250,000 cedis
f average capital employed in a firm is ` 7,00,000, average of actualprofits is ` 1,70,000 and normal rate of return is 10% then value ofGoodwill as per capitalization of average profits is:(a) ` 10,00,000 (b) ` 17,00,000(c) ` 70,00,000 (d) ` 5,30,000
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.