Frazier Service Company had a net income of $14,500 for the

Frazier Service Company had a net income of $14,500 for the year ending December 31, 2016. The total assets on January 1, 2016 were $28,000. The total assets on December 31, 2016 were $16,000.
Calculate Frazier’s return on assets (ROA )

Show your computations and label your work. Round your answer to one decimal place.
What will be an ideal response

ANSWER

Return on Assets = Net Income / Average total assets
Average total assets = (Beginning total assets + Ending total assets) / 2

Return on Assets = $14,500 / [($28,000 + $16, 000 ) / 2]
= $14,500 / $220,000
= 6.59%