[Asja]

Hello…I’m confused…what is this return on total assets ratio and why have I not heard of it before? I’m confused about the whole adding back tax adjusted interest expense too…and why is this not on the ratio cheat sheet that will supposedly be provided on the exam?

Question: calculate ratios using the info below, including this “out of the blue” one that we never mentioned before:

Income Statement
Sales $3,800
Cost of goods sold (1,700)
Gross margin 2,100
Operating expenses (1,400)
Interest expense (100)
Income before tax 600
Income tax expense (180)
Net income $ 420

Answer:

Return on total assets = (net income + after-tax interest expense)/average total assets = [420 + .70(100)]/.5(2,400 + 2,800) = 0.19 The tax rate is .30 = (income tax expense)/(income before tax)= 180/600

By the way, this is from Wiley

“The strongest of all warriors are these two — Time and Patience.” ― Leo Tolstoy (War and Peace)

[bhunt815]

What is this ratio cheat sheet of which you speak? I do not recall such a sheet being provided…

AUD - 79
BEC - 81
FAR - 84
REG - 78

Becker Self Study supplemented with Ninja MCQ's for BEC and REG.

Licensed CPA in Louisiana.

FAR 04/11/2016 - 84
AUD 05/12/2016 - 79
BEC 07/06/2016 - 81
REG 08/29/2016

[chandler]

There is no cheat sheet provided on the exam. Not sure where you heard that, but it's not a thing. Sometimes, the formulas are given in questions, but you need to know what they are.

Chandler Priest

Licensed TX CPA

REG 01/27/18 - 98

BEC 03/03/18 - 96

AUD 04/07/18 - 91

FAR 06/02/18 -96

[Asja]

Oh really? I guess I understood it as a “Cheat sheet”, since that is what they are doing in Wiley practice TBS,
maybe she meant that they will give you the ratio formulas…I guess not all of them…Bummer…I don't stand a chance…I'm like a pea at the bottom of a mountain.

“The strongest of all warriors are these two — Time and Patience.” ― Leo Tolstoy (War and Peace)

[Puppykoala]

Formulas are 9 out of 10 times not given. You really need to memorize all the necessary ones.

Shoot for the stars!

FAR 88 04/19

REG 95 07/19

BEC 91 11/19

AUD 88 12/19

[Author]

Replies