Financial data for Joel de Paris, Incorporated, for last year follow: Joel de Paris, Incorporated Balance Sheet Beginning Balance Ending Balance Assets Cash $ 139,000 $ 133,000 Accounts receivable 340,000 489,000 Inventory 560,000 487,000 Plant and equipment, net 821,000 791,000 Investment in Buisson, S.A. 395,000 434,000 Land (undeveloped) 254,000 249,000 Total assets $ 2,509,000 $ 2,583,000 Liabilities and Stockholders' Equity Accounts payable $ 378,000 $ 333,000 Long-term debt 1,041,000 1,041,000 Stockholders' equity 1,090,000 1,209,000 Total liabilities and stockholders' equity $ 2,509,000 $ 2,583,000 Joel de Paris, Incorporated Income Statement Sales $ 5,264,000 Operating expenses 4,369,120 Net operating income 894,880 Interest and taxes: Interest expense $ 118,000 Tax expense 207,000 325,000 Net income $ 569,880 The company paid dividends of $450,880 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

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.17E: Profitability metrics The following selected data were taken from the financial statements of The...

See similar textbooks

Problem 11-17 (Algo) Return on Investment (ROI) and Residual Income [LO11-1, LO11-2]

Financial data for Joel de Paris, Incorporated, for last year follow:

	Beginning Balance	Ending Balance
Joel de Paris, Incorporated Balance Sheet
Assets
Cash	$ 139,000	$ 133,000
Accounts receivable	340,000	489,000
Inventory	560,000	487,000
Plant and equipment, net	821,000	791,000
Investment in Buisson, S.A.	395,000	434,000
Land (undeveloped)	254,000	249,000
Total assets	$ 2,509,000	$ 2,583,000
Liabilities and Stockholders' Equity
Accounts payable	$ 378,000	$ 333,000
Long-term debt	1,041,000	1,041,000
Stockholders' equity	1,090,000	1,209,000
Total liabilities and stockholders' equity	$ 2,509,000	$ 2,583,000

Joel de Paris, Incorporated Income Statement
Sales		$ 5,264,000
Operating expenses		4,369,120
Net operating income		894,880
Interest and taxes:
Interest expense	$ 118,000
Tax expense	207,000	325,000
Net income		$ 569,880

The company paid dividends of $450,880 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?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 3 images

SEE SOLUTION Check out a sample Q&A here