Question

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           $

Answer 1

Net Income is $ 139.44

Working:

Debt-Equity Ratio		=	Total Liabilities / Total Equity
1.5		=	Total Liabilities / Total Equity
So,
Total Liabilities		1.5
Total Equity		1
Total		2.5
As per Balance sheet equation,
Total Assets		=	Total Liabilities + Total Equity
Total Assets		=	$       2,905
So,
Total Equity		=	(2905/2.5)*1
		=	$       1,162
Net Income		=	Total Equity x Return on Equity
		=	$       1,162	x	12%
		=	$     139.44