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Ebersoll Mining has $430,000 in sales,its ROE is 16.25%, and its total assets turnover is 5.30×....

Ebersoll Mining has $430,000 in sales,its ROE is 16.25%, and its total assets turnover is 5.30×. The company is 73% equity financed, and it has no preferred stock outstanding. What is its net income?

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Answer #1

Return on equity = 16.25%

Sales revenue = $430,000

Return on equity = Net Income / Total equity

Total assets turnover = Net sales / Total assets

5.30 times = $430,000 / Total assets

Total assets = $430,000 / 5.30

Total assets = 81,132.08

Total equity = 81,132.08 * 73% = $59,226.42

Net income = $59,226.42 * 16.25%

Net income = $9,624.29

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