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Precious Metal Mining has $18 million in sales, its ROE is 13%,and its total assets...

Precious Metal Mining has $18 million in sales, its ROE is 13%, and its total assets turnover is 3.2x. Common equity on the firm’s balance sheet is 65% 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.

Solutions

Expert Solution

Given,

Total sales = $18 million

ROE = 13%

Total assets turnover = 3.2

Average total assets = 180,00,000 / 3.2

= 56,25,000 $

As,

Common equity on the firm’s balance sheet is 65% of its total assets.

Equity of the firm = 65 % of 56,25,000

= 36,56,250 $

Net Income = $ 4,75,312.5

= $ 4,75,313 (approx)

jeff jeffy answered 2 years ago
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