Questions: Exercise 1-25 (Algo) Analyzing return on assets LO A2 Swiss Group reports net income of 38,000 for the year. At the beginning of the year, Swiss Group had 151,000 in assets. By the end of the year, assets had grown to 201,000. What is Swiss Group's return on assets for the current year? Did Swiss Group perform better or worse than its competitors if competitors average a 17% return on assets? Complete this question by entering your answers in the tabs below. Return on Assets Group Perform What is Swiss Group's return on assets for the current year? Choose Numerator: Choose Denominator: 1 = Return on assets / =

To calculate Swiss Group's return on assets (ROA) for the current year, we need to use the formula:

$$\text{Return on Assets (ROA)} = \frac{\text{Net Income}}{\text{Average Total Assets}}$$

Step 1: Calculate Average Total Assets

The average total assets are calculated by taking the sum of the beginning and ending assets and dividing by 2:

$$\text{Average Total Assets} = \frac{\text{Beginning Assets} + \text{Ending Assets}}{2}$$

Given:

• Beginning Assets = \$151,000
• Ending Assets = \$201,000

$$\text{Average Total Assets} = \frac{151,000 + 201,000}{2} = \frac{352,000}{2} = 176,000$$

Step 2: Calculate Return on Assets (ROA)

Given:

• Net Income = \$38,000

$$\text{ROA} = \frac{38,000}{176,000}$$

$$\text{ROA} = 0.2159 \text{ or } 21.59\%$$

Conclusion:

Swiss Group's return on assets for the current year is 21.59%.

Comparison with Competitors:

Swiss Group's ROA of 21.59% is higher than the competitors' average ROA of 17%. Therefore, Swiss Group performed better than its competitors in terms of return on assets.