Question

aps Book Precious Metal Mining has $8 million in sales, its ROE is 10%, and its total assets turnover is 3.2x. Common equity on the firm's balance sheet is 45% of its total assets. What is its net income? Write out your answer completely. For example, 5 million should be entered as 5,000,000. Do not round intermediate calculations. Round your answer to the nearest cent. IPS $

Answer 1

Given	Sales		8,000,000
Given	Total Assets Turnover	3.2
	Sales/ Total Assets	3.2
	Total Assets	Sales/3.2
			2,500,000
Given	Comon Equity	45% of Total Assets
	Common Equity	1,125,000
Given	ROE		10%
	ROE		Net Income / Equity
	Net Income	ROE * Equity
			112,500
	Net Income	112,500