Answered

## Init 1 Project [tex]$i$[/tex]

Cola Company and Pop Company both produce and market beverages that are direct competitors. Key financial figures for the businesses for a recent year follow.

\begin{tabular}{lrr}
& Cola & Pop \\
Key Figures, (\[tex]$ millions) & Company & Company \\
Sales & \$[/tex]50,531 & \[tex]$72,617 \\
Net income & \$[/tex]10,956 & \[tex]$8,547 \\
Average assets & \$[/tex]83,000 & \[tex]$77,000
\end{tabular}

\ \textless \ strong\ \textgreater \ Required:\ \textless \ /strong\ \textgreater \

1. Compute return on assets for Cola Company and Pop Company. Note: Enter values in \$[/tex] millions.

\begin{tabular}{|c|c|c|c|c|c|}
\hline & \multicolumn{5}{|c|}{Return on Assets} \\
\hline & Choose Numerator: & & Choose Denominator: & [tex]$=$[/tex] & Return on Assets \\
\hline & & & & [tex]$=$[/tex] & \\
\hline Cola Company return & & & & [tex]$=$[/tex] & \\
\hline Pop Company return & & & & [tex]$=$[/tex] & \\
\hline
\end{tabular}



Answer :

GinnyAnswer
To calculate the return on assets (ROA) for both Cola Company and Pop Company, we use the formula:

[tex]\[ \text{Return on Assets (ROA)} = \frac{\text{Net Income}}{\text{Average Assets}} \][/tex]

Here’s the step-by-step solution for each company.

### Cola Company

1. Identifying the Numerator (Net Income):
- Net Income for Cola Company is \[tex]$10,956 million. 2. Identifying the Denominator (Average Assets): - Average Assets for Cola Company are \$[/tex]83,000 million.

3. Calculating ROA:
- [tex]\( \text{ROA} = \frac{10,956}{83,000} \)[/tex]

- By performing the division, we get:
- [tex]\( \text{ROA} = 0.132 \)[/tex]

Therefore, the return on assets for Cola Company is 0.132 or 13.2%.

### Pop Company

1. Identifying the Numerator (Net Income):
- Net Income for Pop Company is \[tex]$8,547 million. 2. Identifying the Denominator (Average Assets): - Average Assets for Pop Company are \$[/tex]77,000 million.

3. Calculating ROA:
- [tex]\( \text{ROA} = \frac{8,547}{77,000} \)[/tex]

- By performing the division, we get:
- [tex]\( \text{ROA} = 0.111\)[/tex]

Therefore, the return on assets for Pop Company is 0.111 or 11.1%.

### Summary:
- Cola Company Return on Assets: 13.2%
- Pop Company Return on Assets: 11.1%

These percentages represent how efficiently each company is utilizing its assets to generate net income.