Problem 1-10A (15 minutes)
1. Return on assets is net income divided by the average total assets.
Kyzera’s return: $65,000 / $250,000 = 0.26 or 26%.
2. Return on assets seems satisfactory for the risk involved in the
3. We know that revenues less expenses equal net income. Taking the
4. We know from the accounting equation that total financing (liabilities
Problem 1-11A (20 minutes)
1. Return on assets equals net income divided by average total assets.
2. Strictly on the amount of sales to consumers, Coca-Cola’s sales of
$46,542 are less than PepsiCo’s $66,504.
3. Success in returning net income from the average amount invested is
4. The reported figures suggest that Coca-Cola yields a marginally higher
return on assets than PepsiCo. Based on this information alone, we
would be better advised to invest in Coca-Cola than PepsiCo.