Taylor, Inc. has sales of $13,743, total assets of $8,999, and a debt/equity ratio of 0.55....

Question

Question

Answer 1

Answer #1

Debt = Total assets - Equity

Debt / Equity = 0.55
( Total assets - Equity ) / Equity = 0.55
Total assets - Equity = 0.55Equity
8999 - Equity = 0.55Equity
8999 = 0.55Equity + Equity
8999 = 1.55Equity
Equity = 8999 / 1.55	5805.81

Return on equity = Net income / Equity
17% = Net income / 5805.81
Net income = 5805.81 * 17%	986.99	Option C

Answer 2

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