Juniper Design Ltd. of Manchester, England, is a company specializing in providi
ID: 2518082 • Letter: J
Question
Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $450,000 on sales of $1,300,000. The company’s average operating assets for the year were $1,500,000 and its minimum required rate of return was 11%.
Compute the company’s residual income for the year.
Average operating assets:
Net operating income:
Minimum required return:
Residual income:
Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $450,000 on sales of $1,300,000. The company’s average operating assets for the year were $1,500,000 and its minimum required rate of return was 11%.
Explanation / Answer
Average operating assets $1,500,000 Net operating income $450,000 Minimum required return(11% * $1,500,000) $165,000 Residual income $285,000
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