Answer:
(a) 1.57
(b) 12.40%
(c) $76,898.60
Explanation:
Debt-equity ratio = Debt ÷ equity
Hence,
Debt = 0.57 equity
= 0.57 × $620,000
= $353,400
Total assets = Debt + Equity
= 353,400 + 620,000
= $973,400
(a) Equity multiplier:
=Total assets ÷ Equity
= $973,400 ÷ 620,000
= 1.57
(c) Return on assets = Net income ÷ Total assets
Net income = ($973,400 × 0.079)
= $76,898.60
(b) Return On Equity:
= Net income ÷ Total equity
= $76,898.60 ÷ 620,000
= 12.40%(Approx).
