Wiggle Pools has total equity of $358,200 and net income of $47,500. The debt-equity ratio is. 68 and the total asset turnover is 1.2. What is the profit margin?

Question

Business

Brian Griffin

27 August, 16:33

Wiggle Pools has total equity of $358,200 and net income of $47,500. The debt-equity ratio is. 68 and the total asset turnover is 1.2. What is the profit margin?

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Maddison Lynch · Answer 1

It is 6.58%

Explanation:

Debt-Equity Ratio = Debt/Equity

0.68 = Debt/358,200

Debt = 0.68 x 358,200

Debt = $243,576

Total Asset Turnover = Revenue / Total Asset

Total Assets = Debt + Equity = $243,576 + $358,200=$601,776

1.2 = Revenue/601,776

Revenue = 1.2 x 601,776

=$722,131.20

Profit Margin = Net income / Revenue x 100%

= $47,500/$722,131.20 x100%

= 6.58%