Asked by Adrian Barrera on Jun 13, 2024
Verified
Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?
A) $2,568
B) $3,819
C) $4,186
D) $6,283
E) $6,420
Return on Equity
A measure of a corporation's profitability, calculated as net income divided by shareholder's equity.
Debt-Equity Ratio
A financial metric used to evaluate a company's leverage, by calculating the division of its total debts by the equity of its investors.
Net Income
The total earnings of a company after all expenses and taxes have been deducted from revenue.
- Quantify and clarify net income in various contexts.
Verified Answer
JB
Jenifer BarahonaJun 13, 2024
Final Answer :
A
Explanation :
Net income can be calculated using the return on equity (ROE) formula, where ROE = Net Income / Equity. Given ROE is 12% and total equity is $21,400, the net income = 0.12 * $21,400 = $2,568.
Learning Objectives
- Quantify and clarify net income in various contexts.