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    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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