The debt equity ratio of a firm is 0.6. The total asset turnover is 1.40 and...

Question

Question

The debt equity ratio of a firm is 0.6. The total asset turnover is 1.40 and the profit margin is 12%. Total equity is $4,800

Answer 1

Answer #1

Hello Sir/Mam

YOUR REQUIRED ANSWER IS $1290.24

Debt – Equity Ratio = Debt Equity

Hence,

Debt = 0.6 * 4800 = $2,880

Asset Turnover = Average Sales Total Assets

Sales = 1.4$4800 + $2880) = $10,752

Profit Margin = 12% = Net Income Net Sales

Net Income = 12% * $10,752 = $1, 290.24

I hope this solves your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

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Answer 2

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