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Q.7SE

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Horngren'S Financial And Managerial Accounting
Found in: Page 568

Short Answer

Question: S10-7 Computing rate of return on total assets

Barot’s 2018 financial statements reported the following items—with 2017 figures given for comparison:

BAROT INC

Balance Sheet

As of December 31, 2018 and 2017

2018

2017

Total assets

$32,978

$30,660

Total liabilities

19,400

11,560

Total stockholder’s equity

13,578

19,100

Total liabilities and stockholder’s equity

$32,978

$30,660

Net income for 2018 was $3,910, and interest expense was $240. Compute Barot’s rate of return on total assets for 2018. (Round to the nearest percent.)

Answer

The rate of return on total assets is 6.52%.

See the step by step solution

Step by Step Solution

Step 1: Definition of Interest Expenses

The sacrifices made in respect of the fees charged by the lender against the money borrowed are known as interest expenses.

Step 2: Total rate of return on assets

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