Financial data for Joel de Paris, Inc., for last year follow: The company paid d
ID: 2533029 • Letter: F
Question
Financial data for Joel de Paris, Inc., for last year follow:
The company paid dividends of $261,940 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%.
Required:
1. Compute the company's average operating assets for last year.
2. Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.)
3. What was the company’s residual income last year?
Joel de Paris, Inc.Balance Sheet Beginning
Balance Ending
Balance Assets Cash $ 127,000 $ 130,000 Accounts receivable 334,000 477,000 Inventory 576,000 473,000 Plant and equipment, net 883,000 880,000 Investment in Buisson, S.A. 403,000 432,000 Land (undeveloped) 255,000 246,000 Total assets $ 2,578,000 $ 2,638,000 Liabilities and Stockholders' Equity Accounts payable $ 379,000 $ 342,000 Long-term debt 1,026,000 1,026,000 Stockholders' equity 1,173,000 1,270,000 Total liabilities and stockholders' equity $ 2,578,000 $ 2,638,000
Explanation / Answer
Balance Sheet Beginning Ending Balance Balance Assets Cash 127,000 130,000 Accounts receivable 334,000 477,000 Inventory 576,000 473,000 Plant and equipment, net 883,000 880,000 Total Operatingassets 1,920,000 1,960,000 Average operating Asset=1920000+1960000/2 1940000 Margin 13.00 % Net opertaing income/Sales*100 680940/5238000*100 Turnover sales/Avg operating assets 5238000/1940000 2.70 ROI=Margin*Turnover 13*2.7 35.1 % Residual Income Avg operating assets 1940000 Min req rate 15% Min required amt M 291000 Net operating assets N 680940 Residual income N-M 389940 ans Average operating assets $1,940,000 Margin 13.00 % Turnover 2.70 ROI 35.1 % Residual income 389940
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