Chapter 10, Problem 10.1FSC

1.

To determine

Financial statements:

Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making.

Rate of return on total assets:

Rate of return on the total assets is the ratio of the net income, and interest expense to the average total assets. The rate of return on total assets measures the efficiency of the business. It measures how efficiently the business is using its total assets in generating the income.

The rate of return on the total assets is calculated as follows:

$\left\{\begin{array}{l}\text{Rate of return }\\ \text{on total assets}\end{array}\right\}=\frac{\left(\text{Net income + Interest expense}\right)}{\text{Average total assets}}$

To compute: The rate of return on the total assets of Corporation T for the year ended January 30, 2016.

2.

To determine

To compare and discuss: The differences between the rate of return on total assets between Corporation T, and Corporation K for the year ended January 30, 2016.