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Little Deer Industries gathered the following year-end data (in thousands) for 2010 and 2009: 2010 2009 Current Assets $525 $465 Long-Term Assets 885 585 Current Liabilities 385 385 Long-Term Liabilities 575 575 Owners' Equity 575 265 Net Sales 975 775 Gross Margin 485 365 Net Income 255 100 The return on assets for 2010 was: A) 10.5% B) 11.6% C) 18.8% D) 20.7%

Respuesta :

Answer:

60.71 %

Explanation:

Given:

The opening owner's equity i.e for the year 2009 = $ 265

The closing   owner's equity i.e for the year 2010 = $ 575

Net income for the year 2010 = $ 255

Now,

average owner's equity = (Owner's opening equity+owner's closing equity) / 2

or

the average owner's equity = ($ 265 + $ 575) / 2

or

the average owner's equity = $ 420

therefore,

the return on assets for the year 2010 will be calculated as:

Return = (Net income / Average equity) × 100 %

on substituting the values, we get

Return on assets for the year 2010 = ($ 255 / $ 420) × 100 = 60.71 %