Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc
ID: 2432885 • Letter: F
Question
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets $ 127,000 137,000 344,000 472,000 560,000 484,000 809,000 787,000 428,000 246,000 248,000 Cash Accounts receivable Plant and equipment, net Investment in Buisson, SA. Land (undeveloped) 394,000 Total assets $2,480,000 $2,556,000 Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity $ 383,000 341,000 1,047,000 1,047,000 1,050,000 1168,000 Total liabilities and stockholders' equity $2,480,000 $2,556,000 Joel de Paris, Inc. Income Statement Sales Operating expenses $4,092,000 3,355,440 736,560 Net operating income Interest and taxes $ 119,000 Interest expense Tax expense 203,000 322,000 Net income $ 414,560 The company paid dividends of $296,560 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another companyExplanation / Answer
Answers:
1
Margin
18.00%
Turnover
2.2
ROI
39.60%
Working for the answer:
Margin
=net operating income / sales
=736,560 /4092,000
=18%
2
Turnover
=sales / Average operating asset
First we need to find out the average operating assets as under
Beginning
Ending
Total Assets
2,480,000
2,556,000
Less:
investment
394000
428000
Land
246000
248000
Operating assets
1,840,000
1,880,000
Average operating asset
=(1,840,000+1,880,000)/2
=3,720,000/2
=$1,860,000
Turnover
=sales / Average operating asset
=4,092,000/1,860,000
=2.2
3
ROI
= Margin x Turnover
= 18 % x 2.2
= 39.6%
______________________________________________________________
2
Net Operating Income
736560
Minimum required return (19 % x 1,860,000)
353400
Residual Income
383160
Margin
18.00%
Turnover
2.2
ROI
39.60%
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