Respuesta :
The he company's net income is $1,200,000 (third option).
What is the net income?
Return on equity is an example of a profitability ratio. Profitability ratios measure the ability of a firm to generate profits from its asset. Return on equity is the ratio of the net income of a company to its average total equity. The higher the return on equity, the more profitable the company is.
Return on equity can be determined by dividing the net income of a company by its average total equity. If the return on equity is given and we are to determine net income, multiply average total equity by the return on equity.
Net income is total revenue less total cost. Net income is recorded in the income statement. Equity is the difference between the assets of a company and its liabilities. Equity is recorded on the balance sheet of a company.
Return on equity = net income / average total equity
Net income = average total equity x return on equity
30% x $4,000,000
0.3 x $4,000,000 = $1,200,000
To learn more about return on equity, please check: https://brainly.com/question/17147773
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