Financial data for Bridger Inc. for last year are as follows Assets Cash Account

Question

Financial data for Bridger Inc. for last year are as follows Assets Cash Accounts receivable S 159000154,000 450,000 600,000 680.000 846,000 510,000 360,000 590,000 Inventory Plant and equipment, net Investment in Brier Company Land (undeveloped) 821,000 540,000 360,000 Total assets $3,070,000 $3,000,000 Liabilities and Shareholders' Equity Accounts payabl Long-term debt Shareholders equity $ 430,000S 470,000 1,200,0001200,000 1,440,0001.330,000 Total liabilities and shareholders' equity$3,070,000 $3,000,000 BRIDGER IN Income Statem $4,300 000 Salles Operating expenses 3,698.000 602000 209 000319,000 $ 283.000 Operating income Interest and taxes Interest expense Tax expense Net income O Type here to search ?? /2 f4 5 f6

Explanation / Answer

Note : Computation of Operating assets

Average Operating Assets = ( $2,170,000 + $2,130,000) /2  = $2,150,000

Answer 1 a

Margin = Operating Income / Sales = $602,000 / $4,300,000 = 14 %

Turnover = Sales / Average operating assets = $4,300,000  / $2,150,000 = 2 times

ROI = Margin * Turnover =  14 % * 2 times = 28 %

Answer 2

Residual Income = Operating Income  - (Average operating assets * minimum req. return)

= $602,000 - ($2,150,000 * 19 %) = $602,000 - $408,500 =$193,500

Ending Balance Beginning Balance Total Assets $3,070,000 $3,000,000 Less : Land (underdevelop) ($360,000) ($360,000) Less : Investment in Brier Company ($540,000) ($510,000) Total Operating assets $2,170,000 $2,130,000

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