Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of .40. The total asset turnover is 1.63 and the proﬁt margin is 5 %. The total equity is $21,400. What is the amount of the
Net income?
A) $2,568
B) $3,819
C) $4,186
D) $6,283
E) $6,420

Question

Quizplus · Accepted Answer

Return on equity (ROE) is calculated as Net Income / Total Equity. Given ROE is 12% and Total Equity is $21,400, Net Income = 0.12 * $21,400 = $2,568.

Sandwiches-To-Go Has a Return on Equity of 12 % and a Debt-Equity