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The following is an extract of Aster Inc.'s balances:
\begin{tabular}{|l|r|}
\hline \multicolumn{1}{|c|}{ Items } & Amount (\$) \\
\hline Opening inventory & 20,000 \\
\hline Closing inventory & 10,000 \\
\hline Sales & 50,000 \\
\hline
\end{tabular}

What is Aster's return-on-assets ratio?

A. 2

B. 4

C. 3

D. 5

Sagot :

GinnyAnsweridn
To determine Aster’s return-on-assets (ROA) ratio, we will follow these steps:

1. Calculate the Average Inventory:
- The average inventory is determined by taking the sum of the opening inventory and the closing inventory, and then dividing by 2.
- Given:
- Opening inventory = \[tex]$20,000 - Closing inventory = \$[/tex]10,000
- Calculation:
[tex]\[ \text{Average Inventory} = \frac{\text{Opening Inventory} + \text{Closing Inventory}}{2} = \frac{20000 + 10000}{2} = 15000 \][/tex]

2. Calculate Return-on-Assets (ROA) Ratio:
- The ROA ratio is calculated by dividing the sales by the average inventory.
- Given:
- Sales = \$50,000
- Calculation:
[tex]\[ \text{ROA Ratio} = \frac{\text{Sales}}{\text{Average Inventory}} = \frac{50000}{15000} \approx 3.3333 \][/tex]

From this calculation, it is evident that the Return-on-Assets (ROA) ratio is approximately 3.33. Given the multiple-choice options:

A. 2
B. 4
C. 3
D. 5

The closest answer to 3.33 is option C.

So, the correct answer is:
C. 3
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