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Chapter 10: Q.7SE (page 568)

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.)

Short Answer

Expert verified

Answer

The rate of return on total assets is6.52%.

Step by step solution

01

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.

02

Total rate of return on assets

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Most popular questions from this chapter

Accounting for debt investments

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Question: S10-4 Accounting for equity investments

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