Homework Answers
| FORMULA | |||
| Return on Equity Ratio = Net Income / Shareholder's Equity | |||
| Shareholders Equity = Total Assets - Debt | |||
| Shareholders Equity = $ 120,000 - (20% of $ 120,000) | |||
| Shareholders Equity = $ 120,000 - $ 24,000 | |||
| Shareholders Equity = $ 96,000 | |||
| Caclulation of the net income | |||
| EBIT = | $ 40,000 | ||
| Less: Interest @ 6% on $ 24,000 | $ 1,440 | ||
| Earning After interest | $ 38,560 | ||
| Less: Tax @ 34% | $ 13,110.40 | ||
| Net Income | $ 25,449.60 | ||
| CALCULATION OF THE RATIO | |||
| Return on Equity = Net Income / Shareholder's Equity | |||
| Return on Equity = | |||
| Net Income = | $ 25,449.60 | ||
| Divide By | "/" By | ||
| Stock holder's Equity = | $ 96,000 | ||
| Return on Equity = | 26.51% | ||
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Problem 13 Intro Epson expects the following financial data during the coming year Assets: $120,000 ....
Intro Epson expects the following financial data during the coming year. • Assets: $120,000 • Total...
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