Question

Problem 3-18 Using the DuPont Identity [LO3] Y3K, Inc., has sales of $6,279, total assets of $2,895, and a debt–equity ratio of 1.90. If its return on equity is 13 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 = $

Answer #1

**Total Asset Turnover**

Total Asset Turnover = Total Sales / Total Assets

= $6,279 / $2,895

= 2.1689 Times

**Return on Equity (ROE) using the DuPont
Model**

As per DuPont Model, the Return on Equity (ROE) is calculated by using the following formula

Return on Equity (ROE) = Net Profit Margin x Total Asset Turnover x Equity Multiplier

Return on Equity (ROE) = Net Profit Margin x Total Asset Turnover x [1 + Debt-equity ratio]

13.00% = Net Profit Margin x 2.1689 Times x [1 + 1.90]

13.00% = Net Profit Margin x 2.1689 Times x 2.90

13.00% = Net Profit Margin x 6.2898%

Net Profit Margin = 13.00% / 6.2898%

Net Profit Margin = 2.0668%

**Net Income**

Net Income = Total sales x Net Profit Margin

= $6,279 x 2.0668%

= $129.78

**“Hence, the Net Income will be $129.78”**

Y3K, Inc., has sales of $6,359, total assets of $2,975, and a
debt–equity ratio of 1.10. If its return on equity is 11 percent,
what is its net income? (Do not round intermediate calculations and
round your final answer to 2 decimal places, e.g., 32.16.)

Y3K, Inc., has sales of $6,289, total assets of $2,905, and a
debt?equity ratio of 1.5. If its return on equity is 12 percent,
what is its net income? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Net income
$

Y3K, Inc., has sales of $6,289, total assets of $2,905, and a
debt?equity ratio of 1.5. If its return on equity is 12 percent,
what is its net income? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
Net income $

Y3K, Inc., has sales of $4,600, total assets of $3,425, and a
debt-equity ratio of 1.30. If its return on equity is 16 percent,
what its net income?

Y3K, Inc., has sales of $7,555, total assets of $3,565, and a
debt−equity ratio of .42. Assume the return on equity is 14
percent.
What is its net income? (

Y3K, Inc., has sales of $4,300, total assets of $3,160, and a
debt-equity ratio of 1.40. If its return on equity is 11 percent,
what its net income?
Multiple Choice
$144.83
$347.60
$38.40
$106.44
$473.00

Y3K, Inc., has sales of $4,600, total assets of $3,045, and a
debt-equity ratio of 1.20. If its return on equity is 11 percent,
what its net income?
$51.47
$152.25
$334.95
$506.00
$100.78
Highly Suspect Corp. has current liabilities of $429,000, a
quick ratio of 1.70, inventory turnover of 3.50, and a current
ratio of 4.00. What is the cost of goods sold for the company?
$1,677,390
$6,006,000
$729,300
$1,233,375
$3,453,450

Problem 3-17 DuPont Identity [LO 3]
Bethesda Mining Company reports the following balance sheet
information for 2015 and 2016.
BETHESDA MINING COMPANY
Balance Sheets as of December 31, 2015 and 2016
2015
2016
2015
2016
Assets
Liabilities and Owners’ Equity
Current
assets
Current
liabilities
Cash
$
52,990
$
67,084
Accounts
payable
$
189,422
$
197,111
Accounts
receivable
62,781
83,139
Notes
payable
84,520
136,088
Inventory
122,559
188,119
Total
$
273,942
$
333,199
Total
$
238,330
$
338,342
Long-term
debt
$
236,000...

Problem 4-22 Sustainable Growth Rate [LO3] Cambria, Inc., had
equity of $175,000 at the beginning of the year. At the end of the
year, the company had total assets of $330,000. During the year the
company sold no new equity. Net income for the year was $37,000 and
dividends were $5,000. What is the sustainable growth rate for the
company? (Do not round intermediate calculations and round your
final answer to 2 decimal places. (e.g., 32.16)) Sustainable growth
rate %...

Carroll, Inc., has a total debt ratio of .52, total debt of
$327,000, and net income of $41,250.
What is the company’s return on equity? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
Return on equity
%

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