Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc. Balance Sheet |
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Beginning Balance |
Ending Balance |
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Assets | ||||||
Cash | $ | 128,000 | $ | 135,000 | ||
Accounts receivable | 341,000 | 470,000 | ||||
Inventory | 571,000 | 486,000 | ||||
Plant and equipment, net | 850,000 | 839,000 | ||||
Investment in Buisson, S.A. | 399,000 | 430,000 | ||||
Land (undeveloped) | 250,000 | 252,000 | ||||
Total assets | $ | 2,539,000 | $ | 2,612,000 | ||
Liabilities and Stockholders' Equity | ||||||
Accounts payable | $ | 389,000 | $ | 350,000 | ||
Long-term debt | 1,041,000 | 1,041,000 | ||||
Stockholders' equity | 1,109,000 | 1,221,000 | ||||
Total liabilities and stockholders' equity | $ | 2,539,000 | $ | 2,612,000 | ||
Joel de Paris, Inc. Income Statement |
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Sales | $ | 4,966,000 | |||||||
Operating expenses | 4,072,120 | ||||||||
Net operating income | 893,880 | ||||||||
Interest and taxes: | |||||||||
Interest expense | $ | 119,000 | |||||||
Tax expense | 198,000 | 317,000 | |||||||
Net income | $ | 576,880 | |||||||
The company paid dividends of $464,880 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. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
3. What was the company’s residual income last year?
Average operating assets = [(2,539,000-250,000-399,000)+(2,612,000-252,000-430,000]/2 = 1,910,000 |
|
Margin = Net operating income / sales = 893,880/4,966,000 = 18% Turnover = Sales / Average operating assets = 4,966,000/1,910,000 = 2.6 ROI = margin *turnover = 18*2.6 = 46.80% |
|
Residual income = Net operating income - required return = 893,880 - (1,910,000*15%) = 607,380 |
Comment if you face any issues
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 $ 137,000 $ 140,000 Accounts receivable 336,000 472,000 Inventory 571,000 479,000 Plant and equipment, net 846,000 839,000 Investment in Buisson, S.A. 405,000 430,000 Land (undeveloped) 251,000 251,000 Total assets $ 2,546,000 $ 2,611,000 Liabilities and Stockholders' Equity Accounts payable $ 384,000 $ 339,000 Long-term debt 962,000 962,000 Stockholders' equity 1,200,000 1,310,000 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 $ 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 $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 126,000 $ 126,000 Accounts receivable 331,000 473,000 Inventory 568,000 482,000 Plant and equipment, net 875,000 859,000 Investment in Buisson, S.A. 396,000 427,000 Land (undeveloped) 247,000 245,000 Total assets $ 2,543,000 $ 2,612,000 Liabilities and Stockholders' Equity Accounts payable $ 388,000 $ 348,000 Long-term debt 1,002,000 1,002,000 Stockholders' equity 1,153,000 1,262,000 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 Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity $ 136,000 339,000 571,000 814,000 401,000 249,000 $ 2,510,000 $ 135,000 483,000 480,000 802,000 432,000 254,000 $ 2,586,000 $ 374,000 967,000 1,169,000 $ 2,510,000 $ 335,000 967,000...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Ine. Balance Sheet Beginning Balance Ending Balance Assets Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity 139,000 339,000 573,000 829,000 404.000 248,000 $ 2,532,000 134,000 475,000 472.000 839,000 434,000 253,000 $2.607.000 381,000 1,029,000 1, 122,000 $2,532,000 $ 340,000 1,029,000 1,238,000 $2,607,000 Joel de Paris,...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity 134,000 349.000 564,000 863.000 404.000 252,000 $ 2,566,000 $ 137.000 485.000 480,000 848,000 433.000 247,000 $2,630,000 383,000 962,000 1,221,000 $ 2,566,000 $ 341,000 962,000 1,327,000 $2,630,000 Joel...
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 $ 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 $...