A Company Has Net Income of $250,000,net Sales of $2,000,000,and

question 23

Multiple Choice

A company has net income of $250,000,net sales of $2,000,000,and average total assets of $1,500,000.Its return on total assets is equal to:

• A)12.5%
• B)13.3%
• C)16.7%
• D)75.0%
• E)600.0%

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Definitions:

Depreciation Method

A systematic approach used to allocate the cost of a tangible asset over its useful life.

Double Declining-Balance

An accelerated method of depreciation which doubles the normal depreciation rate, reducing the value of an asset more quickly in its early years.

Straight-Line Method

A technique for calculating an asset's depreciation by uniformly distributing its cost throughout its anticipated lifespan.

Residual Value

Residual value is the estimated value of an asset at the end of its useful life.