Question

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.

Answer #1

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

Best of Luck. God Bless

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