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Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets Cash $ 140,000 $ 120,000 450,000 530,000 380,000 620,000 280,000 Accounts receivable 320,000 Inventory ..... Plant and equipment, net Investment in Buisson, S.A.. Land (undeveloped). 680,000 250,000 180,000 170,000 ..... Total assets $2,020,000 $2,100,000 Liabilities and Stockholders' Equity Accounts payable.. Long-term debt .. Stockholders' equity $ 360,000 $ 310,000 1,500,000 1,500,000 160,000 290,000 Total liabilities and stockholders' equity $2,020,000 $2,100,000 .... .... Joel de Paris, Inc. Income Statement Sales ... Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income $4,050,000 3,645,000 $150,000 110,000 $ 145,000

Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets Cash $ 140,000 $ 120,000 450,000 530,000 380,000 620,000 280,000 Accounts receivable 320,000 Inventory ..... Plant and equipment, net Investment in Buisson, S.A.. Land (undeveloped). 680,000 250,000 180,000 170,000 ..... Total assets $2,020,000 $2,100,000 Liabilities and Stockholders' Equity Accounts payable.. Long-term debt .. Stockholders' equity $ 360,000 $ 310,000 1,500,000 1,500,000 160,000 290,000 Total liabilities and stockholders' equity $2,020,000 $2,100,000 .... .... Joel de Paris, Inc. Income Statement Sales ... Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income $4,050,000 3,645,000 $150,000 110,000 $ 145,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Return on Investment (ROI) and Residual Income

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

The company paid dividends of $15,000 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. (Hint: Should you use net income or net operating income in your calculations?)

3. What was the company’s residual income last year?

 

Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets Cash $ 140,000 $ 120,000 450,000 530,000 380,000 620,000 280,000 Accounts receivable 320,000 Inventory ..... Plant and equipment, net Investment in Buisson, S.A.. Land (undeveloped). 680,000 250,000 180,000 170,000 ..... Total assets $2,020,000 $2,100,000 Liabilities and Stockholders' Equity Accounts payable.. Long-term debt .. Stockholders' equity $ 360,000 $ 310,000 1,500,000 1,500,000 160,000 290,000 Total liabilities and stockholders' equity $2,020,000 $2,100,000 .... ....
Transcribed Image Text:Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets Cash $ 140,000 $ 120,000 450,000 530,000 380,000 620,000 280,000 Accounts receivable 320,000 Inventory ..... Plant and equipment, net Investment in Buisson, S.A.. Land (undeveloped). 680,000 250,000 180,000 170,000 ..... Total assets $2,020,000 $2,100,000 Liabilities and Stockholders' Equity Accounts payable.. Long-term debt .. Stockholders' equity $ 360,000 $ 310,000 1,500,000 1,500,000 160,000 290,000 Total liabilities and stockholders' equity $2,020,000 $2,100,000 .... ....
Joel de Paris, Inc. Income Statement Sales ... Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income $4,050,000 3,645,000 $150,000 110,000 $ 145,000
Transcribed Image Text:Joel de Paris, Inc. Income Statement Sales ... Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income $4,050,000 3,645,000 $150,000 110,000 $ 145,000
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