Question

Financial data for Beaker Company for last year appear below: Beaker Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash Accounts receivable Inventory Plant and equipment (net) Investment in Cedar Company Land (undeveloped) Total assets $ 252,000 165,000 298,000 470,000 287,000 410,000 $1,882,000 $ 197,853 189,000 236,000 445,000 311,000 410,000 $1,788,853 Liabilities and owners' equity: Accounts payable Long-term debt Owners' equity Total liabilities and owners' equity $ 227,000 860,000 795,000 $1,882,000 $ 149,000 860,000 779,853 $1,788,853 Beaker Company Income Statement Sales Less operating expenses Net operating income Less interest and taxes: Interest expense $104,700 Tax expense _127,347 Net income $2,270,000 1,884,100 385,900 232,047 153,853 $

2.

Answer 1

1
Beginning Operating assets	1185000	=1882000-287000-410000
Ending Operating assets	1067853	=1788853-311000-410000
Average Operating assets	1126426.50	=(1185000+1067853)/2
A
Margin = Net operating income/Sales
Turnover = Sales/Average Operating assets
ROI = Margin*Turnover
Margin	17.00%	=385900/2270000
Turnover	2.02 or 2.0	=2270000/1126426.50
ROI	34.34%	=17%*2.02
For ROI, the possible answer can also 34.00% and 34.26%
B
Net operating income	385900.00
Less: Minimum required return	337927.95	=1126426.50*30%
Residual Income	47972.05
2
Minimum required return in August	89320	=638000*14%