Financial data for Bridger, Inc., for last year are as follows: Bridger, Inc. Br

Question

Financial data for Bridger, Inc., for last year are as follows: Bridger, Inc. Bridgea Sheet Beg Balance Sheet Beginning Balance Ending Balance Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Brier Company Land (undeveloped) $ 128,000 $ 131,000 345,000 477,000 564,000 482,000 863,000 850,000 398,000 429,000 253,000 252,000 Total assets $2,551,000 $2,621,000 Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity S 377,000 $ 331,000 1,033,000 1,033,000 1,141,000 1,257,000 Total liabilities and stockholders'eqity $2,551,000 $2,621,000 Income Statement Sales Operating expenses $ 5,184,000 4,458,240 725,760 Net operating income Interest and taxes $118,000 Interest expense Tax expense 197,000 315,000 Net income $ 410,760 The company paid dividends of $294,760 last year. The "Investment in Brier Company" on the balance sheet represents an investment in the stock of another company. Required 1. Compute the company's margin, turnover, and return on investment (ROI) for last year. (Round your rs to 2 decimal places.) Margin Turnover ROI

Explanation / Answer

1)

Margin = Net Income / Net Sales = $410760 / $5184000 = 7.92%

Turnover = $5184000

ROI = Department's Net Operating Income / Average Operating Assets of the Department

= $725760 / $2172500 = 33.41%

*Average Operating Assets of the Department (excluding the investment in shares of the Brier company)

= [($2551000 - $398000) + ($2621000 - $429000) ] / 2 = $2172500

2)

Net Operating income $    7,25,760.00 Average Operating Assets (A) $ 21,72,500.00 Required Rate Return(B) 21% Required return on operating assets(A*B) $    4,56,225.00 Residual Income $    2,69,535.00 (Net Operating income - Required return on operating assets)

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