Question

Kyzera manufactures, markets, and sells cellular telephones. The average total assets for Kyzera is \(250,000. In its most recent year, Kyzera reported net income of \)65,000 on revenues of $475,000.

Required 1. What is Kyzera’s return on assets?

Short answer

The return on assets of Kyzera is 26%.

Step-by-step solution

Definition of Assets

The assets are defined as the economic resources owned by individuals and businesses which will help in generating revenue in the future.

Computation of return on assets

$\begin{array}{rcl}\mathrm{Return}\mathrm{on}\mathrm{assets}& =& \frac{\mathrm{Net}\mathrm{income}}{\mathrm{Average}\mathrm{assets}}\times 100\\ & =& \frac{65,000}{250,000}\times 100\\ & =& 26\%\end{array}$