Taylor, Inc. has sales of $11,898, total assets of $9,315, and a debt-equity ratio of .55. If its return on equity is 14 percent, what is its net income?

The net income amounts to  $841.31

Explanation:

The net income also recognized as the net earnings, which is defined as the residual earnings after all the expenses have been subtracted from the sales.

In other words, it is the gross income which is an intermediate earnings before all the expenses are involves and it is the final value of the profit or loss after the expenses.

The net income is computed as:

Net Income (NI) = [Total assets / (1 + debt equity ratio)]  ×  Return on equity (ROE)

= [$9,315 / (1 + 0.55)] × 0.14

= $6,009.6 × 0.14

= $841.31

there was no passage listed but using the process of elimination i'd say it was d. the high economy would do the opposite. i don't see how low prices would affect it. high unemployment is possible but i feel d is the better answer.

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