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13 October, 09:51

Little Deer Industries gathered the following year-end data (in thousands) for 2010 and 2009: 2010 2009 Current Assets $525 $465 Long-Term Assets 885 585 Current Liabilities 385 385 Long-Term Liabilities 575 575 Owners' Equity 575 265 Net Sales 975 775 Gross Margin 485 365 Net Income 255 100 The return on assets for 2010 was: A) 10.5% B) 11.6% C) 18.8% D) 20.7%

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  1. 13 October, 09:57
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    60.71 %

    Explanation:

    Given:

    The opening owner's equity i. e for the year 2009 = $ 265

    The closing owner's equity i. e for the year 2010 = $ 575

    Net income for the year 2010 = $ 255

    Now,

    average owner's equity = (Owner's opening equity+owner's closing equity) / 2

    or

    the average owner's equity = ($ 265 + $ 575) / 2

    or

    the average owner's equity = $ 420

    therefore,

    the return on assets for the year 2010 will be calculated as:

    Return = (Net income / Average equity) * 100 %

    on substituting the values, we get

    Return on assets for the year 2010 = ($ 255 / $ 420) * 100 = 60.71 %
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