American Institute of Constructors (AIC) Level 1 Practice Test

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What is the return on assets when net profit before tax is $15,000 and total assets are $30,000?

0.5%

50%

Return on assets shows how efficiently assets are turned into profit. It’s calculated by dividing profit by total assets and expressing the result as a percentage. Here, profit before tax is 15,000 and total assets are 30,000, so ROA = 15,000 ÷ 30,000 = 0.5, which is 50% when converted to a percentage. So the return on assets is 50%. The other numbers come from misplacing the decimal or not converting to a percentage: 0.5% would be 0.005, 2% would be 0.02, and 200% would be 2.0.

200%