Charlie's Chicken has a debt-equity ratio of 2.05.Return on assets is 9.2 percent,and total equity is $560,000.What is the net income?
A)$105,616
B)$148,309
C)$157,136
D)$161,008
E)$164,909

Name: Charlie's Chicken has a debt-equity ratio of 2.05.Return on assets is 9.2 percent,and total equity is $560,000.What is the net income? A)$105,616 B)$148,309 C)$157,136 D)$161,008 E)$164,909
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Question

Quizplus · Accepted Answer

Equity multiplier = 1 + 2.05 = 3.05Return on equity = .092 × 3.05 = .2806Net income = .2806 × $560,000 = $157,136

Charlie's Chicken Has a Debt-Equity Ratio of 2