Question

Please, please, please adhere to the rounding instructions (written in red), or the answer will be wrong.
Thank you!!

Question 5 2 pts Lion Inc, has sales of $3156, total assets of $991, and a debt-equity ratio of 0.6. fits return on equity is 16%. What is Lion's Net Income? (Round final answer to 2 decimal places. Do not round intermediate calculations) Topic: Financial Ratios (DuPont Model)

Answer 1

Sales = $3156

Total Assets = $991

Total Liabilities = Total Assets = $991

Debt-equity ratio = Total liabilities / Shareholder's equity

0.6 = 991 / Shareholder's equity

Shareholder's equity = 1651.66666666

ROE = 16% = 0.16

$\fn_cm Return\, on\, equity\, (ROE) = \frac{Net\, Income}{Sales} \times \frac{Sales}{Total\, assets} \times \frac{Total\, assets}{Sahreholder's\, equity}$

$\fn_cm 0.16 = \frac{Net\, Income}{3156} \times \frac{3156}{991} \times \frac{991}{1651.66666666}$

$\fn_cm 0.16 = \frac{Net\, Income}{1651.66666666}$

Net income = 0.16 x 1651.66666666 = $264.27