Jensen's Shipping has total assets of $694,800 at year's end. The beginning owners' equity was $362,400....
Jensen's Shipping has total assets of $694,800 at year's end. The beginning owners' equity was $362,400. During the year, the company had sales of $711,000, a profit margin of 5.2 percent, a tax rate of 21 percent, and paid $12,500 in dividends. What is the equity multiplier at year-end?
1.8
1.93
1.72
1.86
1.67
Homework Answers
Answer is 1.80
Sales = $711,000
Profit Margin = 5.20%
Net Income = Sales * Profit Margin
Net Income = $711,000 * 5.20%
Net Income = $36,972
Ending Owners’ Equity = Beginning Owners’ Equity + Net Income -
Dividends
Ending Owners’ Equity = $362,400 + $36,972 - $12,500
Ending Owners’ Equity = $386,872
Equity Multiplier = Ending Total Assets / Ending Owners’
Equity
Equity Multiplier = $694,800 / $386,872
Equity Multiplier = 1.80
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Jensen's Shipping has total assets of $694,800 at year's end.
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