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The following information is provided for Pharoah Company and Flounder Corp.:
| (in $ millions) | Pharoah Company | Flounder Corp. |
| Net income 2017 | $120 | $410 |
| Net sales 2017 | 1325 | 4560 |
| Total assets 12/31/15 | 1040 | 2310 |
| Total assets 12/31/16 | 1125 | 3160 |
| Total assets 12/31/17 | 1190 | 4000 |
What is Flounder’s return on assets (rounded) for 2017?
| 11.5% |
| 10.6% |
| 10.3% |
| 13.0% |
Expert Answer
Average assets for 2017=(Beginning balance+Ending balance)/2
=(3160+4000)/2=$3580
Hence ROA=Net income/Average total assets for Flounder
=($410/3580)
which is equal to
=11.5%(Approx)(A).
