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