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 Land (undeveloped) Total assets $140,000 139,000 470,000 473,000 808,000 435,000 252,000 $2,507,000 2,577,000 348,000 561,000 801,000 404,000 253,000 , S.A Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity $379,000 335,000 1,035,000 1,093,0001,207,000 $2,507,000 2,577,000 1,035,000

Explanation / Answer

1 Beginning operating assets = 2507000-404000-253000= 1850000 Ending operating assets = 2577000-435000-252000= 1890000 Average operating assets = (1850000+1890000)/2= 1870000 2 Margin =Net operating income/Sales = 706860/3927000= 18% Turnover = Sales/Average operating assets = 3927000/1870000= 2.1 ROI = Margin*Turnover = 18%*2.1= 37.8% 3 Residual income = 706860-(1870000*15%)= 426360

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