Question

Financial data for Redstone Company for last year appear below: Ending Balance Redstone Company Statements of Financial Position Beginning Balance Assets: Cash $ 277,000 Accounts receivable 179.000 Inventory 257.000 Plant and equipment (net) 476.000 Investment in Balsam Company 255.000 Land (undeveloped) 335.000 $ 136.386 205,000 270.000 440.000 288.000 335.000 Total assets $1,779,000 $1,674,386 S Liabilities and owners' equity: Accounts payable Long-term debt Owners' equity S 203.000 862.000 714.000 152.000 862.000 660.386 Total liabilities and owners' equity $1,779,000 $1,674,386 Redstone Company Income statement Sales Less operating expenses $ 1,960,000 1,597,400 362.600 Net operating income Less interest and taxes: Interest expense Tax expense $ 105,800 141,414 247 214 Net income S 115,386 The company paid dividends of $169,000 last year. The "Investment in Balsam Company on the statement of financial position represents an investment in the stock of another company Required: a. Compute the company's margin, turnover, and return on investment for last year. (Round your intermediate calculations and final answers to 2 decimal places.) Margin Turnover Return on investment

Answer 1

Answers Margin Assets Turnover ratio : 18.50% 1.75 32.37% (or)32.38% ROI Residual Income 26542.10 |Beginning |Ending Cash 277000 136386 Accounts Receivables 179000 205000 Inventory Plant and Equipment Total Operating Assets 257000 270000 476000 440000 1051386 1189000 Average Operating Assets 1120193 DATA Sales 1960000 Average Opearating Assets Net operating income Minimum Required Rate of Return 1120193 362600 30.00%

Question -A Margin : Net operating Income / Net sales Net operating income 362600 Sales 1960000 18.50% Margin Assets Turnover ration: Netsales / Average Opearating Assets Sales 1960000 Average Opearating Assets Assets Turnover ratio : 1120193 1.75 ROI : Margin * Asset Turnover ratio Margin Assets Turnover ratio : 18.50% 1.75 ROI : Margin * Asset Turnover ratio 32.37% Question -3 Residual Income Average Operating Assets Minimum Required Rate of Return Minimum Required Return Net Operating income 1120193 30% 336057.90 362600.00 Residual income 26542.10