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    Harleygirl35's Avatar
    Harleygirl35 Posts: 3, Reputation: 1
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    #1

    Oct 14, 2009, 07:18 AM
    DuPONT & net income
    Trying to figure out what the gross profit or cost production is for this problem... unsure on how to solve it? :confused:

    Ebersoll Mining:
    Has $6 million in sales
    ROE is 12%
    Total assets turnover is 3.2x
    The company is 50% equity financed
    What is the net income?


    Net Income = Sales - Gross profit; Gross Profit - Cost of Production = Net Income

    NI = 6.0 -
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #2

    Oct 14, 2009, 02:18 PM
    First, use the given sales amount and the asset turnover ratio to get the total assets.



    Then, per the given debt-to-equity info, Equity is half the assets.

    Finally, you can determine Net Income using the Assets amount, and the given ROE.
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