Less interest and taxes: The company paid dividends of $133,000 last year. The \
ID: 2462891 • Letter: L
Question
Less interest and taxes:
The company paid dividends of $133,000 last year. The "Investment in Pine Company" on the statement of financial position represents an investment in the stock of another company.
Compute the company's margin, turnover, and return on investment for last year. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)
The Board of Directors of Windsor, Inc. has set a minimum required return of 25%. What was the company's residual income last year? (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)
Financial data for Windsor, Inc. for last year appear below:Explanation / Answer
a. Operating assets do not include investments in other companies or in undeveloped land: Beginning Ending Balance Balance Cash $308,000 $246,245 Accounts Receivable 131,000 164,000 Inventory 325,000 256,000 Plant and Equipment (Net) 460,000 453,000 Total Operating Assets $1,224,000 $1,119,245 b. Average operating assets = (1,224,000+1,119,245)/2 $1,171,622.50 c. Margin = Net Operating Income/Sales = 329300/1780000 19% d. Turnover = Sales / Average Operating Assets = 1780000/1171622.5 1.52 e. ROI = Margin x Turnover = 19%*1.52 29% f. The Board of Directors of Windsor, Inc., has set a minimum required return of 25%. Net Operating Income $329,300 Minimum Required Return (25% x $1,171,622.5) 292,906 Residual Income $36,394
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