Y3K, Inc., has sales of $6,379, total assets of $2,995, and a debt–equity ratio

Question

Y3K, Inc., has sales of $6,379, total assets of $2,995, and a debt–equity ratio of 1.50. If its return on equity is 12 percent, what is its net income? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

3K, Inc., has sales of $6,379, total assets of $2,995, and a debt-equity ratio of 1.50. If its return on equity is 12 percent, what is its net income? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Net income

Explanation / Answer

Debt-equity ratio=Debt/Equity

Hence debt=1.5Equity

Total assets=debt+equity

Hence total assets=2.5Equity

Hence equity=(2995/2.5)=$1198

ROE=net income/equity

Hence net income=(1198*0.12)=$143.76(Approx)

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