A firm has a return on equity of 15%. The debt-equity ratio is 50%. The total asset turnover is 1.25 and the profit margin is 8%. The total equity is $3,200. What is the amount of the net income?
A) $480
B) $500
C) $540
D) $600
E) $620

Question

Quizplus · Accepted Answer

The return on equity (ROE) is calculated as Net Income / Total Equity. Given ROE is 15% and Total Equity is $3,200, the Net Income is 0.15 * $3,200 = $480.

A Firm Has a Return on Equity of 15