COST ACCOUNTING
FLEXIBLE BUDGETS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
MNL Company wishes to calculate its return on assets. You know that the return on equity is 12% and the debt ratio is 40%. What is the return on assets?
|
|
4.80%
|
|
|
12.00%
|
|
|
7.20%
|
|
|
20.00%
|
Explanation:
Detailed explanation-1: -How Can I Calculate a Company’s ROA? ROA is calculated by dividing a firm’s net income by the average of its total assets. It is then expressed as a percentage. Net profit can be found at the bottom of a company’s income statement, and assets are found on its balance sheet.
Detailed explanation-2: -Return on Equity Ratio = Net Income / Shareholders’ Equity To find shareholders’ equity, look at your business balance sheet. You can calculate shareholders’ equity by subtracting your total liabilities from your total assets.
Detailed explanation-3: -To calculate ROE, divide a company’s net annual income by its shareholders’ equity. Multiply the result by 100 to get a percentage.
There is 1 question to complete.