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Total assets = $780,000, debt-equity ratio = 0.62, profit margin = 5.49%, return on equity =...

Total assets = $780,000, debt-equity ratio = 0.62, profit margin = 5.49%, return on equity = 12.47%. 1) What is net income? 2) What are sales? 3) What is the return on assets? 4) What is the total asset turnover? 5) What is the equity muliplier? 6) What is the total debt ratio? Please show all steps.

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Answer #1

Total Assets = 780,000
Total Assets = Total Equity * ( 1 + Debt Equity Ratio)
Total Equity = 780,000/(1 + 0.62) = 481481.481481
Total Debt = Total assets - Total Equity = 780,000 - 481481.481481 = 298518.518518

1) Net income = Return on equity * Total Equity = 12.47% * 481481.481481 = 60040.74

2) Sales = Net Income/ Profit% = 60040.74/5.49% = 1,093,638.26

3)Return on assets = Net Income/ Total assets = 60040.74/780,000 = 7.697%

4) Total asset turnover = Sales/ Total Assets = 1,093,638.26/780,000 = 1.402

5) Equity Multiplier = Total assets/ Total Equity = 780,000/481481.481481 = 1.62

6) Total debt Ratio = Total Debt/Total assets = 298518.518518/780,000 = 0.62


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