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World Exports has total assets of $938,280, a total asset turnover rate of 1.18, a debt-equity ratio of .47, and a return on equity of 18.7 percent. What is the firm's net income?$119,359.43$88,303.33$104,624.14$121,548.09$92,236.67

Respuesta :

Answer:

$119,359.43

Explanation:

Since the total asset turnover is 1.18 and the total assets is $938,280. By applying the total asset turnover formula we can find out the total debt value which is shown below:

Total asset turnover = (Sales ÷ Total assets)

1.18 = (Sales ÷ $938,280)

So, the total equity = $938,280 × 1.18 = $1,107,170.40

We know that,

Total assets = Debt + Equity

$938,280 = 0.47X + 1X

So, X =  $638,285.71

X = Total equity

Now return on equity equals to

Return on equity = (Net income) ÷ (total equity)

18.7% = Net income ÷ $638,285.71

Hence, net income = $119,359.43

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