Question

Question: Key comparative figures (\( millions) for both Apple and Google follow.

Key Figure Apple Google

Liabilities + Equity . . . . . . . . . . . . \)290,479 \(147,461

Net income . . . . . . . . . . . . . . . . . . 53,394 16,348

Revenues and sales . . . . . . . . . . . 233,715 74,989

Required 2. What is the return on assets for (a) Apple and (b) Google? Apple’s beginning-year assets equal \)231,839 (in millions) and Google’s beginning-year assets equal $129,187 (in millions).

Short answer

Answer

The return on assets of Apple is 20.44% and the return on assets of Google is 11.81%

Step-by-step solution

Return on assets of Apple

$$\begin{gathered} \mathbf{Averageassets}\mathbf{=}\frac{\mathbf{Openingassets}\mathbf{+}\mathbf{ClosingAssets}}{\mathbf{2}} \\ \mathbf{=}\frac{\mathbf{290}\mathbf{,}\mathbf{479}\mathbf{+}\mathbf{231}\mathbf{,}\mathbf{839}}{\mathbf{2}} \\ \mathbf{=}\mathbf{\$}\mathbf{261}\mathbf{,}\mathbf{159} \\ \mathbf{Returnonassets}\mathbf{=}\frac{\mathbf{NetIncome}}{\mathbf{AverageAssets}}\mathbf{\times }\mathbf{100} \\ \mathbf{=}\frac{\mathbf{\$}\mathbf{53}\mathbf{,}\mathbf{394}}{\mathbf{\$}\mathbf{261}\mathbf{,}\mathbf{159}}\mathbf{\times }\mathbf{100} \\ \mathbf{=}\mathbf{20}\mathbf{.}\mathbf{44}\mathbf{\%} \end{gathered}$$

Return on Assets of Google

$$\begin{gathered} \mathbf{Averageassets}\mathbf{=}\frac{\mathbf{Openingassets}\mathbf{+}\mathbf{ClosingAssets}}{\mathbf{2}} \\ \mathbf{=}\frac{\mathbf{129}\mathbf{,}\mathbf{187}\mathbf{+}\mathbf{147}\mathbf{,}\mathbf{461}}{\mathbf{2}} \\ \mathbf{=}\mathbf{\$}\mathbf{138}\mathbf{,}\mathbf{324} \\ \mathit{R}\mathit{e}\mathit{t}\mathit{u}\mathit{r}\mathit{n}\mathit{o}\mathit{n}\mathit{a}\mathit{s}\mathit{s}\mathit{e}\mathit{t}\mathit{s}\mathbf{=}\frac{\mathbf{NetIncome}}{\mathbf{AverageAssets}}\mathbf{\times }\mathbf{100} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\frac{\mathbf{\$}\mathbf{16}\mathbf{,}\mathbf{348}}{\mathbf{\$}\mathbf{138}\mathbf{,}\mathbf{324}}\mathbf{\times }\mathbf{100} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\mathbf{11}\mathbf{.}\mathbf{81}\mathbf{\%} \end{gathered}$$