The following is an extract of Aster Inc.'s balances:
Items
Amount ($)
Opening inventory 20,000
Closing inventory 10,000
Sales
50,000
What is Aster's return-on-assets ratio?
A. 2
B.
4
C. 3
D. 5

C. 3

Explanation:

Return on Assets ratio = Net income after tax / average total assets.

Average total asset is opening total assets + ending total asset / 2

Also , inventory turn over ratio is sales / average inventory

Since no information is given on net income after tax and total assets hence Aster's return on asset ratio cannot be calculated.

His inventory turnover will be ;

Average inventory = Opening inventory + Ending inventory /2

$20,000 + $10,000 = $30,000

$30,000/2 = $15,000

Since sales is $50,000, therefore

$50,000/$15,000 = 3.3