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Problem 10-15 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity Sales Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income Joel de Paris, Inc. Income Statement 1. 2. 3. $ 111,000 208,000 $ 4,032,000 3,507,840 524,160 Average operating assets Margin Turnover ROI Residual income 319,000 $ 205,160 Beginning Balance % $ % 127,000 $ 346,000 564,000 863,000 408,000 248,000 $ 2,556,000 The company paid dividends of $101,160 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. (Do not round intermediate calculations and round your final answers to 2 decimal places.) 3. What was the company's residual income last year? Ending Balance 137,000 490,000 484,000 829,000 426,000 252,000 $ 2,618,000 385,000 $ 343,000 992,000 1,179,000 992,000 1,283,000 $ 2,556,000 $ 2,618,000

Problem 10-15 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity Sales Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income Joel de Paris, Inc. Income Statement 1. 2. 3. $ 111,000 208,000 $ 4,032,000 3,507,840 524,160 Average operating assets Margin Turnover ROI Residual income 319,000 $ 205,160 Beginning Balance % $ % 127,000 $ 346,000 564,000 863,000 408,000 248,000 $ 2,556,000 The company paid dividends of $101,160 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. (Do not round intermediate calculations and round your final answers to 2 decimal places.) 3. What was the company's residual income last year? Ending Balance 137,000 490,000 484,000 829,000 426,000 252,000 $ 2,618,000 385,000 $ 343,000 992,000 1,179,000 992,000 1,283,000 $ 2,556,000 $ 2,618,000

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter14: Valuation: Market-based Approach
Section: Chapter Questions
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Problem 10-15 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity Sales Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income Joel de Paris, Inc. Income Statement 1. 2. 3. $ 111,000 208,000 $ 4,032,000 3,507,840 524,160 Average operating assets Margin Turnover ROI Residual income 319,000 $ 205,160 Beginning Balance % $ % 127,000 $ 346,000 564,000 863,000 408,000 248,000 $ 2,556,000 The company paid dividends of $101,160 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. (Do not round intermediate calculations and round your final answers to 2 decimal places.) 3. What was the company's residual income last year? Ending Balance 137,000 490,000 484,000 829,000 426,000 252,000 $ 2,618,000 385,000 $ 343,000 992,000 1,179,000 992,000 1,283,000 $ 2,556,000 $ 2,618,000
Transcribed Image Text:Problem 10-15 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity Sales Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income Joel de Paris, Inc. Income Statement 1. 2. 3. $ 111,000 208,000 $ 4,032,000 3,507,840 524,160 Average operating assets Margin Turnover ROI Residual income 319,000 $ 205,160 Beginning Balance % $ % 127,000 $ 346,000 564,000 863,000 408,000 248,000 $ 2,556,000 The company paid dividends of $101,160 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. (Do not round intermediate calculations and round your final answers to 2 decimal places.) 3. What was the company's residual income last year? Ending Balance 137,000 490,000 484,000 829,000 426,000 252,000 $ 2,618,000 385,000 $ 343,000 992,000 1,179,000 992,000 1,283,000 $ 2,556,000 $ 2,618,000
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