Y3K, Inc., has sales of $6,279, total assets of $2,895, and a debt–equity ratio
ID: 2716697 • Letter: Y
Question
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.)
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.)
Explanation / Answer
A( Asset) = L( Debt) + C (Equity)
Debt and equity ratio=1.9
L / C = 1.9
L = 1.9C
A = 1.9C + C
2,895 = 2.9 C
C = 2,895 / 2.9 = 998.28
Equity=$998.28
Return on Equity =13%
Net Income / Equity=0.13
Net income / 998.28 =0 .13
Net income = $129.78
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