O ezto.mheducation.omp B I U A Alignment Number Conditional Format as Formatting
ID: 2815097 • Letter: O
Question
O ezto.mheducation.omp B I U A Alignment Number Conditional Format as Formatting Table Styles rd Font Last year, Stumble-on-Inn, Inc., reported an ROE of 19 percent. The firm's debt ratio was 60 percent, sales were $34 million, and the capital intensity was 1.30 times. Calculate the net income for Stumble- on-Inn last year. (Do not round intermediate calculations. Enter your answer in dollars not in millions.) ROE Debt ratio Sales Capital intensity ratio 19% 60% 34,000,000 1.30 $ Complete the following analysis. Do not hard code values in your Total assets Total debt Total equity Net income | Sheet1 | READ Attempt(s)Explanation / Answer
Capital intensity ratio = Total assets/ Sales
1.3= Total assets/ 34000000
Total assets= 34000000*1.3 = $ 44,200,000
Debt ratio = Debt/ Total assets
0.6= Total debt/ 44200000
Total debt = 44200000* 0.6 = 26,520,000
Total equity = Total assets- Debt = 44,200,000- 26,520,000=
$17,680,000
ROE= Net Income/ Equity
0.19 = Net Income/ 17,680,000
Net Income = 0.19*17,680,000
= $3,359,200
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