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 | 346,000 | 487,000 | ||||
Inventory | 567,000 | 487,000 | ||||
Plant and equipment, net | 817,000 | 787,000 | ||||
Investment in Buisson, S.A. | 392,000 | 430,000 | ||||
Land (undeveloped) | 255,000 | 246,000 | ||||
Total assets | $ | 2,507,000 | $ | 2,576,000 | ||
Liabilities and Stockholders' Equity | ||||||
Accounts payable | $ | 380,000 | $ | 339,000 | ||
Long-term debt | 977,000 | 977,000 | ||||
Stockholders' equity | 1,150,000 | 1,260,000 | ||||
Total liabilities and stockholders' equity | $ | 2,507,000 | $ | 2,576,000 | ||
Joel de Paris, Inc. Income Statement |
|||||||||
Sales | $ | 4,324,000 | |||||||
Operating expenses | 3,805,120 | ||||||||
Net operating income | 518,880 | ||||||||
Interest and taxes: | |||||||||
Interest expense | $ | 123,000 | |||||||
Tax expense | 208,000 | 331,000 | |||||||
Net income | $ | 187,880 | |||||||
The company paid dividends of $77,880 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. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.)
3. What was the company’s residual income last year?
Average operating assets = [(2,507,000-255,000-392,000)+(2,576,000-246,000-430,000)]/2 = 1,880,000 |
|
Margin = Net operating income / Sales = 518,880 / 4,324,000 = 12% Turnover = Sales /Average operating assets = 4,324,000 / 1,880,000 = 2.3 ROI =Margin * turnover = 12*2.3 = 27.60% |
|
Residual income = Net operating income - required return = 518,880 - (1,880,000*15%) = 236,880 |
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 $ 139,000 $ 131,000 Accounts receivable 349,000 475,000 Inventory 576,000 473,000 Plant and equipment, net 796,000 821,000 Investment in Buisson, S.A. 393,000 430,000 Land (undeveloped) 251,000 246,000 Total assets $ 2,504,000 $ 2,576,000 Liabilities and Stockholders' Equity Accounts payable $ 381,000 $ 335,000 Long-term debt 1,049,000 1,049,000 Stockholders' equity 1,074,000 1,192,000 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 $ 128,000 $ 136,000 Accounts receivable 339,000 478,000 Inventory 561,000 483,000 Plant and equipment, net 892,000 863,000 Investment in Buisson, S.A. 405,000 431,000 Land (undeveloped) 251,000 245,000 Total assets $ 2,576,000 $ 2,636,000 Liabilities and Stockholders' Equity Accounts payable $ 371,000 $ 334,000 Long-term debt 983,000 983,000 Stockholders' equity 1,222,000 1,319,000 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 133,000 344,000 579,000 804,000 410,000 247,000 $ 2,517,000 $ 134,000 477,000 487,000 802,000 431,000 254,000 $2,585,000 $ 374,000 990,000 1,153,000 $ 2,517,000 $ 331,000 990,000 1,264,000 $2,585,000...
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 $ 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 $...