Question 31 3.03 pts The formula for determining the rate earned on total assets

Question

Question 31 3.03 pts The formula for determining the rate earned on total assets is Net Income + Interest Expense/Average Total Assets. Assume that the Interest Expense for Shine, Inc. for the Year Ended December 31, 2011, is $25,000. Assume further that Income before Income Taxes is $395,000, Income Taxes is $150,000 and Net Income is $245,000. If the Average Total Assets for Shine, Inc. for the Year Ended December 31, 2011 is $909,000, what is the rate earned on total assets? 2.9% 3.4 26.9% 29.7%

Explanation / Answer

Rate earned on total assets = (Net income+Interest expense)/Average total assets

                                          = (245000+25000)*100/909000

Rate earned on total assets = 29.7%

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