Question

RST Ltd’s has the following information

Sales = 300000

Cost of Goods Sold = Rs 140000

Pre-Interest Operating Expenses = Rs 30000

Interest Expenses = Rs 10000

Tax rate = 20%

Average total assets = Rs 1000000

What is RST Ltd’s Return on Assets?

A 22% Correct Answer Incorrect Answer
B 12% Correct Answer Incorrect Answer
C 9.6% Correct Answer Incorrect Answer
D 10.6% Correct Answer Incorrect Answer
E 11.6% Correct Answer Incorrect Answer

Solution

Return on Assets = Net Income/Average Total Assets (Net Income = Sales – COGS – Pre-Interest Operating Expenses – Interest Expenses -Tax expenses)/Average Total Assets {(300000-140000- 30000-10000) @80%}/1000000             9.6%       

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