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 $ 137,000 Accounts receivable 332,000 474,000 Inventory 561,000 490,000 Plant and equipment, net 861,000 819,000 Investment in Buisson, S.A. 395,000 432,000 Land (undeveloped) 251,000 245,000 Total assets $ 2,526,000 $ 2,597,000 Liabilities and Stockholders' Equity Accounts payable $ 390,000 $ 335,000 Long-term debt 969,000 969,000 Stockholders' equity 1,167,000 1,293,000 Total liabilities and stockholders' equity $ 2,526,000 $ 2,597,000 Joel de Paris, Inc. Income Statement Sales $ 4,560,000 Operating expenses 3,967,200 Net operating income 592,800 Interest and taxes: Interest expense $ 113,000 Tax expense 197,000 310,000 Net income $ 282,800 The company paid dividends of $156,800 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?
Answer- 1)-The company average operating assets for last year was =$1900000.
Explanation- Calculation of average operating assets = (Opening operating assets+ Closing operating assets)/2
=($126000+$332000+$561000+$861000)+($137000+$474000+$490000+$819000)/2
=($1880000+$1920000)/2
=$1900000
Operating assets = Cash+ Accounts receivable+ Inventory+ Plant & equipment, net
2)- Margin – (Net operating income /Sales)*100
= ($592800/$4560000)*100
= 13%
Turnover = Sales/ Average operating assets
= $4560000/$1900000
=2.4
Return on investment = Margin*Turnover
= 13%*2.4
= 31.2%
3)- Residual income for the last year = $307800.
Explanation- Residual income =Operating income –(Average operating assets*Required rate of return)
= $592800-($1900000*15%)
= $592800-$285000
= $307800
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 $ 135,000 $ 128,000 Accounts receivable 348,000 471,000 Inventory 561,000 485,000 Plant and equipment, net 836,000 836,000 Investment in Buisson, S.A. 403,000 428,000 Land (undeveloped) 251,000 249,000 Total assets $ 2,534,000 $ 2,597,000 Liabilities and Stockholders' Equity Accounts payable $ 377,000 $ 339,000 Long-term debt 1,024,000 1,024,000 Stockholders' equity 1,133,000 1,234,000 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 $ 128,000 Accounts receivable 348,000 471,000 Inventory 561,000 485,000 Plant and equipment, net 836,000 836,000 Investment in Buisson, S.A. 403,000 428,000 Land (undeveloped) 251,000 249,000 Total assets $ 2,534,000 $ 2,597,000 Liabilities and Stockholders' Equity Accounts payable $ 377,000 $ 339,000 Long-term debt 1,024,000 1,024,000 Stockholders' equity 1,133,000 1,234,000 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 $...