Answer:
Net Income = $75,281.80
Explanation:
Given that
Total assets turnover = sales/total assets
Where
Sales = 2.75 million
Asset turnover = 2.7
Thus
Total assets = 2750000/2.7
= $1,018,518.52
Also,
EM.= Total assets/equity
Where
EM = 2.53
Assets = $1,018,518.52
Thus,
Equity = 1,018,518.52/2.53
= $ 402,576.49
Finally,
Recall that
ROE = Net Income ÷ Equity
Therefore,
Net income = ROE × Equity
Where
ROE = 18.7 % = 0.187
NI = 0.187 × 402576.49
= $75,281.80
Answer:
Explanation:
Given:
Asset turnover = 2.7 times
ROE = 18.7 %
Sales = $2.75 million
Equity multiplier, EM = 2.53 times
Return on asset, ROA
ROE = ROA × EM
18.7/100 = ROA × 2.53
ROA = 0.0739
ROE = Net Income/Shareholders' Equity
Asset turnover, AT = Net sales/total asset
Total asset = net sales ÷ AT
= 2,750,000 ÷ 2.7
= $1,018,500
ROA = Net income/total assets
Net income, NI = 0.0739 × $1,018,500
= $ 75,270
