In 2016, Bubble Inc. had net income of $500,000, assets of $5,000,000, sales of $2,000,000, and debt of 2,000,000. In 2017, Bubble Inc. had net income of $600,000, assets of $7,000,000, sales of $1,300,000, and debt of 2,000,000. Did Bubble Inc's return on assets improve from 2016 to 2017?

Question

Zaria Wood

Business

14 January, 05:38

In 2016, Bubble Inc. had net income of $500,000, assets of $5,000,000, sales of $2,000,000, and debt of 2,000,000. In 2017, Bubble Inc. had net income of $600,000, assets of $7,000,000, sales of $1,300,000, and debt of 2,000,000. Did Bubble Inc's return on assets improve from 2016 to 2017?

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Answers (1)

Know the Answer?

Rachel Faulkner · Answer 1

No

Explanation:

The computation of the return of assets is calculated by applying the formula which is shown below:

Return on assets = Net income : assets

In 2016, the return on assets would be equal to

= $500,000 : $5,000,000

= 0.1

In 2017, the return on assets would be equal to

= $600,000 : $7,000,000

= 0.085

By comparing the return on assets for both the years, we get to know that the return on assets is declining from 2016 to 2017