FINANCIAL MANAGEMENT

QUESTION 1

a. Briefly explain the relationship between retained earnings and net income.

b. Tina Camping Inc. reported $12 million of retained earnings this year, compared to $10 million last year. It also paid out $4 million in total common dividends this year. Calculate its net income for this year. Show your calculations.

QUESTION 2

Stevens Hardware has an ROA of 11%, a 9% profit margin, and an ROE of 17%.

a. What is its total assets turnover? Show your calculations. Do not round intermediate calculations. Round your final answer to two decimal places.

b. What is its equity multiplier? Show your calculations. Do not round intermediate calculations. Round your final answer to two decimal places.