Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 126,000 $ 137,000 Accounts receivable 333,000 476,000 Inventory 574,000 488,000 Plant and equipment, net 817,000 789,000 Investment in Buisson, S.A. 403,000 430,000 Land (undeveloped) 249,000 255,000 Total assets $ 2,502,000 $ 2,575,000 Liabilities and Stockholders' Equity Accounts payable $ 378,000 $ 333,000 Long-term debt 972,000 972,000 Stockholders' equity 1,152,000 1,270,000 Total liabilities and stockholders' equity $ 2,502,000 $ 2,575,000 Joel de Paris, Inc. Income Statement Sales $ 4,862,000 Operating expenses 4,035,460 Net operating income 826,540 Interest and taxes: Interest expense $ 123,000 Tax expense 204,000 327,000 Net income $ 499,540 The company paid dividends of $381,540 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 5SEQ

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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	$	126,000		$	137,000
Accounts receivable		333,000			476,000
Inventory		574,000			488,000
Plant and equipment, net		817,000			789,000
Investment in Buisson, S.A.		403,000			430,000
Land (undeveloped)		249,000			255,000
Total assets	$	2,502,000		$	2,575,000
Liabilities and Stockholders' Equity
Accounts payable	$	378,000		$	333,000
Long-term debt		972,000			972,000
Stockholders' equity		1,152,000			1,270,000
Total liabilities and stockholders' equity	$	2,502,000		$	2,575,000

Joel de Paris, Inc. Income Statement
Sales			$	4,862,000
Operating expenses				4,035,460
Net operating income				826,540
Interest and taxes:
Interest expense	$	123,000
Tax expense		204,000		327,000
Net income			$	499,540

The company paid dividends of $381,540 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?

1.
Average operating assets
2.
Margin
%
Turnover
ROI
%
3.
Residual income

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