Answer:
$80,485.65
Explanation:
Since the debt equity ratio is 0.67 and the total equity value is $595,000. By applying the debt equity formula we can find out the total debt value which is shown below:
Debt equity ratio = (Total debt ÷ Shareholders’ Equity)
0.67 = (Total debt ÷ $595,000)
So, the total equity = $595,000 × 0.67 = $398,650
So, the total assets would be equal to
= Total debt + total equity
= $595,000 + $398,650
= $993,650
The return on assets is 8.1%. So, here we apply the return on assets formula which is shown below:
Return on assets = (Net income) ÷ (total assets)
8.1% = Net income ÷ $993,650
Hence, net income = $80,485.65
