Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc

Question

Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet BeginningEnding Balance Balance Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A Land (undeveloped) $ 137,000 $ 133,000 479,000 487,000 821,000 432,000 248,000 349,000 574,000 820,000 391,000 245,000 Total assets $2,516,000 $2,600,000 Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity $ 376,000 S 345,000 1,011,000 1,011,000 1,129,000 1,244,000 Total liabilities and stockholders' equity $2,516,000 $2,600,000 Joel de Paris, Inc. Income Statement Sales Operating expenses $ 5,130,000 4,257,900 872,100 Net operating income Interest and taxes $111,000 Interest expense Tax expense 02,000 313,000 Net income S 559,100 The company paid dividends of $444,100 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company

Explanation / Answer

Beginning operating assets = 2516000-391000-245000= $1880000 Ending operating assets = 2600000-432000-248000= $1920000 Average operating assets=(1880000+1920000)/2= $1900000 1 Margin=Net oeprating income/Sales=872100/5130000= 17% Turnover = Sales/Average operating assets=5130000/1900000= 2.7 ROI = Margin*Turnover = 17%*2.7= 45.9% 2 Net operating income 872100 Minimum required return 285000 =(1900000*15%) Residual income 587100

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