An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

A) $118,048
B) $119,600
C) $120,202
D) $121,212
E) $124,097

Question

Toynell Williams · Accepted Answer

Final Answer : A, Explanation :  To find the net income, first calculate total assets using the equity and debt-equity ratio: Total Assets = Equity * (1 + Debt-Equity Ratio) = $672,100 * (1 + 0.62) = $1,088,002. Then, calculate sales using total asset turnover: Sales = Total Assets * Total Asset Turnover = $1,088,002 * 1.39 = $1,511,322.78. Finally, calculate net income using the profit margin: Net Income = Sales * Profit Margin = $1,511,322.78 * 0.078 = $118,048.38, which rounds to $118,048.

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

A) $118,048
B) $119,600
C) $120,202
D) $121,212
E) $124,097

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Related questions

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?A) $118,048B) $119,600C) $120,202D) $121,212E) $124,097

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Learning Objectives

Learning Objectives

Related questions

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

A) $118,048
B) $119,600
C) $120,202
D) $121,212
E) $124,097