Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 131,000 $ 127,000 Accounts receivable 340,000 486,000 Inventory 565,000 482,000 Plant and equipment, net 844,000 825,000 Investment in Buisson, S.A. 396,000 434,000 Land (undeveloped) 248,000 254,000 Total assets $ 2,524,000 $ 2,608,000 Liabilities and Stockholders' Equity Accounts payable $ 389,000 $ 338,000 Long-term debt 981,000 981,000 Stockholders' equity 1,154,000 1,289,000 Total liabilities and stockholders' equity $ 2,524,000 $ 2,608,000 Joel de Paris, Inc. Income Statement Sales $ 3,990,000 Operating expenses 3,351,600 Net operating income 638,400 Interest and taxes: Interest expense $ 122,000 Tax expense 203,000 325,000 Net income $ 313,400 The company paid dividends of $178,400 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?
1 | ||
Beginning Operating assets | 1880000 | =2524000-396000-248000 |
Ending Operating assets | 1920000 | =2608000-434000-254000 |
Average Operating assets | 1900000 | =(1880000+1920000)/2 |
2 | ||
Margin = Net operating income/Sales | ||
Turnover = Sales/Average Operating assets | ||
ROI = Margin*Turnover | ||
Margin | 16.00% | =638400/3990000 |
Turnover | 2.10 | =3990000/1900000 |
ROI | 33.60% | =16%*2.1 |
3 | ||
Net operating income | 638400 | |
Less: Minimum required return | 285000 | =1900000*15% |
Residual Income | 353400 |
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 138,000 $ 132,000 Accounts receivable 340,000 485,000 Inventory 575,000 482,000 Plant and equipment, net 797,000 791,000 Investment in Buisson, S.A. 405,000 430,000 Land (undeveloped) 249,000 248,000 Total assets $ 2,504,000 $ 2,568,000 Liabilities and Stockholders' Equity Accounts payable $ 382,000 $ 347,000 Long-term debt 968,000 968,000 Stockholders' equity 1,154,000 1,253,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 137,000 $ 128,000 Accounts receivable 334,000 480,000 Inventory 578,000 480,000 Plant and equipment, net 881,000 882,000 Investment in Buisson, S.A. 398,000 430,000 Land (undeveloped) 247,000 252,000 Total assets $ 2,575,000 $ 2,652,000 Liabilities and Stockholders' Equity Accounts payable $ 384,000 $ 340,000 Long-term debt 984,000 984,000 Stockholders' equity 1,207,000 1,328,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 129,000 $ 132,000 Accounts receivable 340,000 479,000 Inventory 577,000 476,000 Plant and equipment, net 794,000 793,000 Investment in Buisson, S.A. 401,000 427,000 Land (undeveloped) 255,000 249,000 Total assets $ 2,496,000 $ 2,556,000 Liabilities and Stockholders' Equity Accounts payable $ 389,000 $ 344,000 Long-term debt 971,000 971,000 Stockholders' equity 1,136,000 1,241,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 127,000 $ 136,000 Accounts receivable 349,000 484,000 Inventory 569,000 490,000 Plant and equipment, net 835,000 810,000 Investment in Buisson, S.A. 394,000 433,000 Land (undeveloped) 251,000 249,000 Total assets $ 2,525,000 $ 2,602,000 Liabilities and Stockholders' Equity Accounts payable $ 387,000 $ 346,000 Long-term debt 952,000 952,000 Stockholders' equity 1,186,000 1,304,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 135,000 $ 136,000 Accounts receivable 337,000 475,000 Inventory 573,000 487,000 Plant and equipment, net 865,000 852,000 Investment in Buisson, S.A. 401,000 426,000 Land (undeveloped) 250,000 253,000 Total assets $ 2,561,000 $ 2,629,000 Liabilities and Stockholders' Equity Accounts payable $ 376,000 $ 337,000 Long-term debt 986,000 986,000 Stockholders' equity 1,199,000 1,306,000 Total liabilities and stockholders' equity $...
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 $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 130,000 $ 139,000 Accounts receivable 344,000 486,000 Inventory 565,000 473,000 Plant and equipment, net 821,000 802,000 Investment in Buisson, S.A. 401,000 431,000 Land (undeveloped) 249,000 250,000 Total assets $ 2,510,000 $ 2,581,000 Liabilities and Stockholders' Equity Accounts payable $ 384,000 $ 346,000 Long-term debt 1,008,000 1,008,000 Stockholders' equity 1,118,000 1,227,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 128,000 $ 127,000 Accounts receivable 333,000 476,000 Inventory 563,000 479,000 Plant and equipment, net 816,000 798,000 Investment in Buisson, S.A. 395,000 429,000 Land (undeveloped) 252,000 245,000 Total assets $ 2,487,000 $ 2,554,000 Liabilities and Stockholders' Equity Accounts payable $ 373,000 $ 339,000 Long-term debt 1,016,000 1,016,000 Stockholders' equity 1,098,000 1,199,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 129,000 $ 136,000 Accounts receivable 342,000 473,000 Inventory 577,000 486,000 Plant and equipment, net 832,000 825,000 Investment in Buisson, S.A. 390,000 433,000 Land (undeveloped) 253,000 252,000 Total assets $ 2,523,000 $ 2,605,000 Liabilities and Stockholders' Equity Accounts payable $ 388,000 $ 347,000 Long-term debt 1,038,000 1,038,000 Stockholders' equity 1,097,000 1,220,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 136,000 $ 133,000 Accounts receivable 340,000 479,000 Inventory 567,000 485,000 Plant and equipment, net 847,000 833,000 Investment in Buisson, S.A. 402,000 427,000 Land (undeveloped) 245,000 253,000 Total assets $ 2,537,000 $ 2,610,000 Liabilities and Stockholders' Equity Accounts payable $ 374,000 $ 343,000 Long-term debt 1,024,000 1,024,000 Stockholders' equity 1,139,000 1,243,000 Total liabilities and stockholders' equity $...