5% MINDTAP Q Search this course Ch 04: End-of-Chapter Problems-Analysis of Finan

Question

5% MINDTAP Q Search this course Ch 04: End-of-Chapter Problems-Analysis of Financial Statements Attempts 8. Problem 4.08 (DuPONT and Net Income) Precious Metal Mining has S10 million in sales, its ROUs 13%, and its total assets turnover is 2.sx. Common equty on the firm's balance sheet is 40% of its total assets, what is its net income? Write out your answer completely. For example, s million should be entered as 5,000,000. Do not round intermediate calculations. Round your answer to the nearest cent O Type here to search

Explanation / Answer

Precious Metal Mining Sales = 10000000 ROE = 13% Total Assets Turnover = 2.5x Equity to total assets = 40% Total Assets Turnover = Sales / Total Assets 2.5 x = 10000000 / Total Assets Total Assets = $4000000 Equity = $4000000 x 40% = 1600000 ROE = Net Income / Total Equity 13% = Net Income / 1600000 Net Income = 208000

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