Question

profitability ratios: denver, incorporated, has sales of $14.2 million, total assets of $11.3 million, and total debt of $4.9 million. assume the profit margin is 5 percent. What is net income?

Answer 1

$710,000.

EXPLANATION: Given that Denver, Incorporated has sales of $14.2 million, total assets of $11.3 million, and total debt of $4.9 million, we can calculate the net income using the profit margin formula:

Profit Margin = Net Income / Sales

Assuming the profit margin is 5%, we can solve for net income as follows:

Net Income = Profit Margin * Sales

= 0.05 * $14.2 million

= $710,000

Therefore, Denver, Incorporated’s net income is $710,000.