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Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc Balance Sheet Beginning Ending Balance BalanRequired: 1. Compute the companys average operating assets for last year. 2. Compute the companys margin, turnover, and ret

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Answer #1
Beginning balance Ending balance
cash 131000 133000
Accounts receivables 349000 483000
Inventory 562000 489000
Plant and equipment, net 858000 835000
Operating assets 1900000 1940000
Note : Investments in Buisson, S.A. and land (undeveloped) are not an operating assets as they do not contribute to the operating activities of the company.
1. Average operating assets = ( Beginning operating assets + Ending operating assets ) / 2 = ( 1900000 + 1940000 ) / 2 1920000
2. Margin = Net operating income / Sales = 537600 / 3840000 14.00%
Turnover = Sales / Average operating assets = 3840000 / 1920000 2.00
Return on investment (ROI) = Net operating income / Average operating assets = 537600 / 1920000 28.00%
3. Residual income = Net operating income - ( Minimum Required rate of return * Average operating assets ) = 537600 - ( 15% * 1920000 ) 249600
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