Return on Assets The following financial data is from Hi-Tech Instruments\' fina

Question

Return on Assets The following financial data is from Hi-Tech Instruments' financial statemenss (thousands of dollars, except earnings per share j Sales revenue $210.000 Cost of goods sold 125,000 Net income 4500 Earmingp per share 5.15 Hi-Tech Instruments,nc. Balance Sheet of Dallars) Dec. 31, 2016 Dec. 31 20000 $18,000 41,000 ccount recelvable Ine 9500 otal currentse 06 300102 700 2.600 50.500 13 800 74500 $167 000 Pane (net Total asse Labilidies and Stockhalders Equity 56.000 $000 22 500 18.700 Accrued laies 5 6 8 9

Explanation / Answer

  

   

Solution: Formulae: 1)Return On Assets = Net Profit After Tax *100 Avarage Total Assets 2) Total Assets= Current Assets + Long Term Assets 3)Avarage Total assets=Previous year total assets+Current year total assets 2 Calulculation of Return On Assets of hi-tech instuments:     1) Total Assets= (102700+64300)+(106300+68200)    2 170750 2)Net Profit After Tax= 10300 3)Return On Assets= 10300 *100 170750 6.03% (approx.) Return On Assets of Industry= 7.60% Conclussion:Retun on Assets of Hi Tech Industry(60.3%) is lower as compared to Industry(7.60%)

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