I have received two conflicting answers.
One tutor says 78.03, the other says 78.08
All calculations should NOT be rounded, but the final
answer should be (as noted in directions).
What is the correct answer?
Equity = Assets / (Debt + Equity)
= 1,021 / (0.7 + 1)
= 1,021 / 1.7
= 600.58
DuPont model:
Return on equity = Net income ratio × Asset turnover ratio × Equity multiplier
0.13 = (Net income / 2,550) × (Sales / Assets) × (Assets / Equity)
0.13 = (Net income / 2,550) × (2550 / 1021) × (1021 / 600.58)
0.13 = Net income / 600.58
Net income = 0.13 × 600.58
= 78.0754
= 78.08 by rounding (Answer)
I have received two conflicting answers. One tutor says 78.03, the other says 78.08 All calculations...
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