Wittels Corporation has provided the following data: $\begin{array}{lrr}
&\text { Year 2 } & \text { Year 1 } \
\text { Total assets }&\$ 1,253,000 & \$ 1,230,000 \
\text { Total liabilities }&\$ 586,000 & \$ 570,000 \
\text { Total stockholders' equity }&\$ 667,000 & \$ 660,000
\end{array}$ In Year 2, the company's net operating income was $42,571, its net income before taxes was $21,571, and its net income was $15,100. The company's equity multiplier is closest to:
A)1.14
B)0.53
C)0.88
D)1.87

Question

Quizplus · Accepted Answer

The equity multiplier is calculated as Total Assets divided by Total Stockholders' Equity. For Year 2, it is $1,253,000 / $667,000 = 1.88, which is closest to 1.87.

Wittels Corporation Has Provided the Following Data In Year 2, the Company's Net Operating Income Was $42,571