Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 134,000 $ 138,000 Accounts receivable 334,000 483,000 Inventory 561,000 473,000 Plant and equipment, net 871,000 846,000 Investment in Buisson, S.A. 393,000 431,000 Land (undeveloped) 248,000 246,000 Total assets $ 2,541,000 $ 2,617,000 Liabilities and Stockholders' Equity Accounts payable $ 385,000 $ 334,000 Long-term debt 1,049,000 1,049,000 Stockholders' equity 1,107,000 1,234,000 Total liabilities and stockholders' equity $ 2,541,000 $ 2,617,000 Joel de Paris, Inc. Income Statement Sales $ 3,840,000 Operating expenses 3,302,400 Net operating income 537,600 Interest and taxes: Interest expense $ 112,000 Tax expense 190,000 302,000 Net income $ 235,600 The company paid dividends of $108,600 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?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 19P

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Financial data for Joel de Paris, Inc., for last year follow:

Joel de Paris, Inc. Balance Sheet
	Beginning Balance		Ending Balance
Assets
Cash	$	134,000		$	138,000
Accounts receivable		334,000			483,000
Inventory		561,000			473,000
Plant and equipment, net		871,000			846,000
Investment in Buisson, S.A.		393,000			431,000
Land (undeveloped)		248,000			246,000
Total assets	$	2,541,000		$	2,617,000
Liabilities and Stockholders' Equity
Accounts payable	$	385,000		$	334,000
Long-term debt		1,049,000			1,049,000
Stockholders' equity		1,107,000			1,234,000
Total liabilities and stockholders' equity	$	2,541,000		$	2,617,000

Joel de Paris, Inc. Income Statement
Sales			$	3,840,000
Operating expenses				3,302,400
Net operating income				537,600
Interest and taxes:
Interest expense	$	112,000
Tax expense		190,000		302,000
Net income			$	235,600

The company paid dividends of $108,600 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?

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