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 Beginning Balance Ending Balance Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) $ 127,000 $ 128,000 349,000 490,000 566,000 483,000 878,000859,000 431,000 252,000255,000 390,000 Total assets $2,562,000 $2,646,000 Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity $ 377,000 344,000 1,002,000 1,002,000 1,183,000 1,300,000 Total liabilities and stockholders' equity $2,562,000 $2,646,000 Joel de Paris, Inc. Income Statement Sales Operating expenses $5,044,000 4,388,280 655,720 Net operating income Interest and taxes $ 113,000 Interest expense Tax expense 197,000 310,000 Net income $ 345,720

Explanation / Answer

1 MARGIN= NET INCOME / SALES *100 = 345720/5044000*100 = 6.854084 = 6.9%(ROUNDED OFF) TURNOVER=SALES / AVERAGE TOTAL ASSETS = 50444000/((2562000+2646000)/2) = 1.93702 = 1.9(ROUNDED OFF) ROI = NET INCOME+INTEREST/AVERAGE TOTAL ASSETS*100 = (345720+113000)/((2562000+2646000)/2)*100 = 17.61598 = 17.60% 2 NET OPERATING INCOME=655720 MINIMUM REQUIRED RETURN= 416640 (AVERAGE TOTAL ASSETS*MINIMUM REQUIRED RATE) (2562000+2646000)/2*16% RESIDUAL INCOME= 239080 (655720-416640)

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