Compute for the company return on assets

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Question - SAMPLE PROBLEMS ON FINANCIAL RATIOS

1. The management of International Heal Medical Company is evaluating the performance of its three (3) divisions. The Booboo Division had operating profit of 24,950 and on average used assets with a book value of 311,900. The Splint Division had an operating profit of 17,500 and used average assets of 177,950. The Intensive Care Division had an operating profit of 28,500 and average assets of 475,000. The company is planning to award the Intensive Care Division relying on its high operating profit. Should the management continue with this decision? Justify your answer.

2. Charlie's Construction Company is a growing construction business that has a few contracts to build storefronts in Pasay. Charlie's balance sheet shows beginning assets of 1,000,000 and an ending balance of 2,000,000 of assets. During the current year, Charlie's company had a net income of 20,000,000. Compute for the company's return on assets and interpret the results.

Reference no: EM132764896

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