Chapter 1, Problem 1.39E

To determine

Return on Assets (ROA): This financial ratio evaluates how efficiently the assets are used in earning net income. So, ROA is a tool used to measure the performance of a company.

Formula of ROA:

$\begin{array}{c}\text{Return on assets}=\frac{\text{Net}\text{income}}{\text{Average total assets}}\\ =\frac{\text{Net}\text{income}}{\left(\frac{\text{Beginning total assets+Ending total assets}}{2}\right)}\end{array}$

To calculate: ROA for AA Services for the year ending December 31, 2018.