Step Up Ladders Company provides the following financial information: Income from operations $ 200 comma 000 Interest expense 48 comma 000 Gains / (losses) on sale of equipment 2 comma 500 Net income 149 comma 500 Total assets at Jan. 1 2 comma 700 comma 000 Total assets at Dec. 31 3 comma 300 comma 000 Calculate return on investment based on the information given above. (Round your answer to two decimal places.)

Question

Business

Marlon

1 December, 15:44

Step Up Ladders Company provides the following financial information: Income from operations $ 200 comma 000 Interest expense 48 comma 000 Gains / (losses) on sale of equipment 2 comma 500 Net income 149 comma 500 Total assets at Jan. 1 2 comma 700 comma 000 Total assets at Dec. 31 3 comma 300 comma 000 Calculate return on investment based on the information given above. (Round your answer to two decimal places.)

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Answers (1)

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Leah · Answer 1

Answer: 6.67%

Explanation:

Return on Investment is calculated by dividing Income from operations by average total assets.

Average Total Assets = (Beginning Value + Closing Value) / 2

= (2,700,000 + 3,300,000) / 2

= 6,000,000/2

= $3,000,000

Return on Investment = Income from operations / Average Total Assets

Return on Investment = 200,000/3,000,000

Return on Investment = 0.06667

= 6.67%