Learning Objective 6-7
1) Use the following selected information from PDG Corporation to determine the return on assets for the year.
Beginning total assets
|
$300,000
|
Ending total assets
|
$350,000
|
Sales revenue
|
$900,000
|
Total operating expenses
|
$800,000
|
Interest
|
$15,000
|
Net income
|
$85,000
|
A) 15%
B) 276.92%
C) 26.15%
D) 30.77%
2) Use the following selected information from PDG Corporation to determine the asset turnover ratio for the year.
Beginning total assets
|
$300,000
|
Ending total assets
|
$350,000
|
Sales revenue
|
$900,000
|
Total operating expenses
|
$800,000
|
Interest
|
$15,000
|
Net income
|
$85,000
|
A) 0.15
B) 2.77
C) 0.26
D) 0.31
3) Use the following selected information from XYZ Corporation to determine the return on assets for the year.
Beginning total assets
|
$150,000
|
Ending total assets
|
$130,000
|
Net income
|
$65,000
|
Interest
|
$5,000
|
Total revenue
|
$270,000
|
Total operating expenses
|
$200,000
|
A) 50%
B) 25%
C) 35%
D) 46%
4) Use the following selected information from XYZ Corporation to determine the asset turnover ratio for the year.
Beginning total assets
|
$150,000
|
Ending total assets
|
$130,000
|
Net income
|
$65,000
|
Interest
|
$5,000
|
Total revenue
|
$270,000
|
Total operating expenses
|
$200,000
|
A) 0.50
B) 2.25
C) 0.35
D) 1.93
5) Use the following selected information from ABC Corporation to determine the return on assets for the year.
Total revenues
|
$100,000
|
Total operating expenses
|
$65,000
|
Interest
|
$6,000
|
Beginning total assets
|
$500,000
|
Ending total assets
|
$440,000
|
Ending retained earnings
|
$300,000
|
A) 21.3%
B) 6.17%
C) 16. 7%
D) 7.45%
6) Use the following selected information from ABC Corporation to determine the asset turnover ratio for the year.
Total revenues
|
$100,000
|
Total operating expenses
|
$65,000
|
Interest
|
$6,000
|
Beginning total assets
|
$500,000
|
Ending total assets
|
$440,000
|
Ending retained earnings
|
$300,000
|
A) 0.21
B) 1.00
C) 0.17
D) 0.75
7) Which statement below best describes the meaning of return on assets (ROA)?
A) It answers the question: “How much profit does the company have for each dollar of revenues?”
B) It is the percentage of profit earned from collecting accounts receivable.
C) It indicates how well management uses a company’s assets to generate net income.
D) It measures the leverage during a period.
8) Use the following selected information from Alpha Corporation to determine the return on assets for the year.
Total revenues
|
$200,000
|
Total operating expenses
|
$155,000
|
Dividends
|
$5,000
|
Beginning total assets
|
$100,000
|
Ending total assets
|
$120,000
|
Ending retained earnings
|
$300,000
|
A) 181.8%
B) 36.4%
C) 40.9%
D) 37.5%
9) Use the following selected information from Alpha Corporation to determine the asset turnover ratio for the year.
Total revenues
|
$200,000
|
Total operating expenses
|
$155,000
|
Dividends
|
$5,000
|
Beginning total assets
|
$100,000
|
Ending total assets
|
$120,000
|
Ending retained earnings
|
$300,000
|
A) 1.82
B) 0.36
C) 0.41
D) 0.33
10) Return on assets is a ratio used to evaluate how effectively assets generate sales.
11) Return on assets is a ratio used to evaluate how effectively assets generate income.
12) Asset turnover is a ratio used to evaluate how effectively assets generate sales.
13) Asset turnover is a ratio used to evaluate how effectively assets generate income.