Calculate net income given the following information: ﬁxed asset turnover = 4 times; proﬁt margin = 20%; net ﬁxed assets = $25,000.
A) $16,000
B) $18,000
C) $20,000
D) $22,000
E) $24,000

Question

Quizplus · Accepted Answer

Net income can be calculated using the formula:
Net income = Fixed asset turnover x Profit margin x Net fixed assets

Substituting the given values in the formula, we get:
Net income = 4 x 0.20 x $25,000 = $20,000

Therefore, the best choice is (C) $20,000.

Calculate Net Income Given the Following Information: ﬁXed Asset Turnover