Question Content Area The balance sheets at the end of each of the first two years of operations indicate the following: Kellman Company Year 2 Year 1 Total current assets $627,453 $584,269 Total investments 67,475 54,298 Total property, plant, and equipment 866,358 676,683 Total current liabilities 107,059 87,515 Total long-term liabilities 320,288 232,231 Preferred 9% stock, $100 par 90,729 90,729 Common stock, $10 par 526,846 526,846 Paid-in capital in excess of par-common stock 67,097 67,097 Retained earnings 449,267 310,832 Using the balance sheets for Kellman Company, if net income is $108,820 and interest expense is $45,344 for Year 2, what is the return on total assets for the year (round percent to two decimal points)

Respuesta :

The return on total assets for the year 1 for Kellman Company equals 6.97%.

What is a return on total assets?

This is a financial tool that show how well a firm investments generate value which shows the productivity level for such firm.

The formula for Return on total assets = Net income / Total asset.

Assuming we are asked to prepare the return on total assets for the year 1.

Return on total assets = Net Income / (Total current assets + Total investments + Total property, plant, and equipment)

Return on total assets = $108,820 / ($627,453 + $67,475 +$ 866,358)

Return on total assets = $108,820 / $1,561,286

Return on total assets = 0.0696989533

Return on total assets = 6.96989533%

Return on total assets = 6.97%

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