Y3K, Inc., has sales of $7,395, total assets of $3,485, and a debt-equity ratio
ID: 2778584 • Letter: Y
Question
Y3K, Inc., has sales of $7,395, total assets of $3,485, and a debt-equity ratio of .26. Assume the return on equity is 17 percent.
What is its equity multiplier? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
What is its total asset turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
What is its profit margin? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
What is its net income? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Required:What is its equity multiplier? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Explanation / Answer
Equity Multiplier = Total assets / Stock holders equity
Debt / Equity = 0.26
0.26 Equity = Debt
Debt + Equity = 1
0.26 Equity + Equity = 1
Equity = 0.79
Debt = 0.21
Equity = 79% of total assets
= 79% * 3485 i.e 2766
Debt = 3485-2766 i.e 719
Equity multiplier = 3485/2766 i.e 1.26
Total assets turnover = Net sales / Total assets
= 7395/3485 i.e 2.12 times
Profit margin = 17%
Net Income = 7395 * 17% i.e 1257
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.