The net income is $884.
Given,
The return on equity for the firm = 17%
The total asset turnover for the firm = 1.6
Given profit margin = 5%
The total equity = $5,200
Net income = ?
As now we have given all the above given values, we have to calculate the net income. Here, the net income can be calculated by multiplying the return on equity with total equity.
Thus,
Return on equity = Net income / Total equity
Which implies that:
Net Income = Total Equity * Return on Equity
In this question, we know total equity is $5,200 and return on equity is 17%, so net income is:
Net income = $5,200 * 17%
Hence, Net income = $884
Net income refers to an amount which an individual or business makes after deducting costs, taxes, and allowances.
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