Question

DTO, Inc., has sales of $16.7 million, total assets of $12.9 million, and total debt of $5.7 million. Assume the profit margin is 5 percent. a. What is net income?

Answer 1

Answer:

$835,000

Explanation:

Given that,

Sales = $16.7 million

Total assets = $12.9 million

Total debt = $5.7 million.

Assume the profit margin is 5 percent

Profit margin = Net Income ÷ Sales

0.05 = Net Income ÷ 16.7 million

Net Income = 16.7 million × 0.05

                    = 0.835 million

                    = $835,000

Therefore, the net income of the DTO, Inc., is $835,000.