Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc
ID: 2474504 • Letter: F
Question
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 133,000 $ 127,000 Accounts receivable 332,000 473,000 Inventory 575,000 471,000 Plant and equipment, net 860,000 869,000 Investment in Buisson, S.A. 397,000 434,000 Land (undeveloped) 248,000 249,000 Total assets $ 2,545,000 $ 2,623,000 Liabilities and Stockholders' Equity Accounts payable $ 373,000 $ 339,000 Long-term debt 953,000 953,000 Stockholders' equity 1,219,000 1,331,000 Total liabilities and stockholders' equity $ 2,545,000 $ 2,623,000 Joel de Paris, Inc. Income Statement Sales $ 4,608,000 Operating expenses 3,916,800 Net operating income 691,200 Interest and taxes: Interest expense $ 115,000 Tax expense 198,000 313,000 Net income $ 378,200 The company paid dividends of $266,200 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company.
Compute the company’s margin, turnover, and return on investment (ROI) for last year
The board of directors of Joel de Paris, Inc., has set a minimum required rate of return of 17%. What was the company’s residual income last year?
net income=
minium required=
residual=
Required: 1.Compute the company’s margin, turnover, and return on investment (ROI) for last year
2.The board of directors of Joel de Paris, Inc., has set a minimum required rate of return of 17%. What was the company’s residual income last year?
net income=
minium required=
residual=
Explanation / Answer
Joel de Paris Inc,. Net Operating Capital Beginning Ending Cash 133,000 127,000 Accounts Receivable 332,000 473,000 Inventory 575,000 471,000 Net PPE 860,000 869,000 Less Accounts Payable (373,000) (339,000) Net Operating Capital 1,527,000 1,601,000 Average Operating Capital 1,564,000 1.00 Sales 4,608,000 Net Operating Income 691,200 Profit Margin= 15.00% Average Net operating Capital 1,564,000 Turnover ratio= Sales /Avg Operating Capital= 2.95 ROI = Net Operating Margin*Turnover Ratio= 44.19% 2.00 Net Operating Income = 691,200 Average Operating Capital 1,564,000 Min Required return @17%== 265,880 Residula iNcome = 425,320
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