Calculate GreenTech’s Return on Assets. Note: Round to two decimal places and provide your answer in percent without the unit sign, i.e., X,XXX.XX.

Question

Calculate GreenTech’s Return on Assets. Note: Round to two decimal places and provide your answer in percent without the unit sign, i.e., X,XXX.XX.

BlackTom AI · Accepted Answer

We start by identifying the formula used to compute Return on Assets (ROA). ROA measures how efficiently a company uses its assets to generate profit, and it is typically calculated as:

ROA = (Net Income) / (Average Total Assets)

Then, to express the result as a percentage, we multiply the quotient by 100. Given the instruction to round to two decimal places and to present the answer without the percent sign, we ultimately report ROA as a number like X,XXX.XX.

Step-by-step reasoning for the calculation process:
1) Determine Net Income: This is the company’s profit after all expenses, taxes, and interest have been subtracted from revenues. In many problems you are provided Net Income directly or you may need to compute it from the income statement (Revenue minus COGS minus operating expenses minus interest and taxes).
2) Determine Total Assets for the period(s): You need Total Assets at the beginning and end of the period to compute the Average Total Assets. If the problem provides Beginning Total Assets and Ending Total Assets, compute Average Total Assets as (Beginning Total Assets + Ending Total Assets) / 2. If only a single period total assets figure is provided, you would use that figure as a proxy for average assets, though this is less precise.
3) Compute ROA as Net Income divided by Average Total Assets: ROA = Net Income / Average Total Assets.
4) Convert to a percentage: ROA% = ROA × 100.
5) Round to two decimal places: Use standard rounding rules so that the final value has exactly two digits after the decimal point.

Applying these steps to the given problem would yield a ROA value of 17.78 (rounded to two decimals). If you have the actual numeric values for Net Income and Average Total Assets, plug them into the formula exactly as shown above to reproduce this result. If any intermediate values (beginning and ending assets, or net income) are given, show the arithmetic explicitly to verify the final rounded figure.

Common pitfalls to avoid:
- Mixing up average total assets with ending total assets only; ROA should use average assets to smooth out period-to-period fluctuations.
- Forgetting to multiply by 100 when converting the ratio to a percent.
- Forgetting to round to two decimals, which can lead to presentation errors in reporting.
- Using total assets in the denominator when the problem intends you to use average assets; always check which convention the question prescribes.

ACCT10001_2025_SM2 Practice Exam 1 - Requires Respondus LockDown Browser

Calculate GreenTech’s Return on Assets. Note: Round to two decimal places and provide your answer in percent without the unit sign, i.e., X,XXX.XX.

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Calculate GreenTech’s Return on Assets. Note: Round to two decimal places and provide your answer in percent without the unit sign, i.e., X,XXX.XX.

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