A firm has a return on equity of 23 percent. The total asset turnover is 2.2 and the profit margin is 6 percent. The total equity is $5,600. What is the net income

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Business

Scott Shea

2 July, 10:34

A firm has a return on equity of 23 percent. The total asset turnover is 2.2 and the profit margin is 6 percent. The total equity is $5,600. What is the net income

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Chelsea Mccall · Answer 1

The net income is $1288

Explanation:

Given the return on equity for the firm = 23 %

The total asset turnover for the firm = 2.2

Given profit margin = 6 %

The total equity = $5600

Since we have given all the above values. Now we have to calculate the net income. Here, the net income can be calculated by multiplying the return on equity with total equity.

Return on equity = Net income / Total equity

23% = Net income / $5,600

Net income = $5,600 * 23%

Net income = $1,288