Question

Financial data for Joel de Paris, Inc., for last year follow:

Joel de Paris, Inc. Balance Sheet
	Beginning Balance			Ending Balance
Assets
Cash	$	139,000		$	132,000
Accounts receivable		344,000			484,000
Inventory		566,000			481,000
Plant and equipment, net		851,000			843,000
Investment in Buisson, S.A.		393,000			430,000
Land (undeveloped)		251,000			246,000
Total assets	$	2,544,000		$	2,616,000
Liabilities and Stockholders' Equity
Accounts payable	$	375,000		$	340,000
Long-term debt		963,000			963,000
Stockholders' equity		1,206,000			1,313,000
Total liabilities and stockholders' equity	$	2,544,000		$	2,616,000

Joel de Paris, Inc. Income Statement
Sales					$	4,224,000
Operating expenses						3,463,680
Net operating income						760,320
Interest and taxes:
Interest expense	$	125,000
Tax expense		193,000				318,000
Net income					$	442,320

The company paid dividends of $335,320 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?

Answer 1

Answers Average Operating Assets Margin Assets Turnover ratio : ROI Residual Income 1920000 18.00% 2.20 39.60% 472320 Enan Cash Accounts Receivables Inventory Plant and Equipment Beginning Ending 139000 132000 344000 484000 566000 481000 851000 843000 19000001940000 Question 1 Average Operating Assets 1920000 Sales Average Opearating Assets Net operating income Minimum Required Rate of Return DATA 4224000 1920000 760320 15.00%

Question -2 Margin : Net operating Income / Net sales Net operating income 760320 Sales 4224000 Margin 18.00% Assets Turnover ration : Netsales / Average Opearating Assets Sales 4224000 Average Opearating Assets 1920000 Assets Turnover ratio : 2.20 ROI : Margin * Asset Turnover ratio Margin 18.00% 2.2 39.60% ROI : Margin * Asset Turnover ratio Question - 3 Residual Income Minimum Required Rate of Return Minimum Required Return Net Operating income Residual income 1920000 15% 288000 7603201 472320