Question

Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 132,000 $ 137,000 Accounts receivable 330,000 483,000 Inventory 573,000 476,000 Plant and equipment, net 845,000 824,000 Investment in Buisson, S.A. 397,000 431,000 Land (undeveloped) 248,000 251,000 Total assets $ 2,525,000 $ 2,602,000 Liabilities and Stockholders' Equity Accounts payable $ 385,000 $ 341,000 Long-term debt 1,014,000 1,014,000 Stockholders' equity 1,126,000 1,247,000 Total liabilities and stockholders' equity $ 2,525,000 $ 2,602,000 Joel de Paris, Inc. Income Statement Sales $ 4,180,000 Operating expenses 3,553,000 Net operating income 627,000 Interest and taxes: Interest expense $ 116,000 Tax expense 201,000 317,000 Net income $ 310,000 The company paid dividends of $189,000 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

Answer:

Explanation:

NB: please check the attached files for workings.

1. Average Operating Assets =1,880,000

2. ROI=32.5%

3. Residual income is 329,000