Chapter 15, Problem 14QS

To determine

Concept Introduction:

Rate of Return on total assets: Rate of Return on total assets can be defined as the ratio that measures a company’s net income against its total net assets or average total assets.

Rate of Return on total assets can be calculated as $–$

$\text{Rate of Return on Total Assets}=\frac{\text{Net Income}}{\text{Average Total assets}}$

Now, the average total assets are calculated as $–$

$\text{Average total assets}=\frac{\text{Beginning Total assets}+\text{Ending total assets}}{2}$

Requirement 1

To describe:

How return on total assets is computed.

To determine

Requirement 2

To describe:

What does return on total assets reflect?