B 1 12 SECTION 4 - Two (2) Problem questions - Total 20 marks 5 Question 1 - 11 marks 5 Q1. Financial data for Summerland Company for last year appear below: 6 7 8 9 Summerland Company Statements of Financial Position Beginning Balance DITUM RA 10 Assets: 22 Cash 13 Accounts receivable 14 Inventor: 15 Plant and equipment (net) 16 Investment in ABC Company 17 Land (underiereloped) 18 Total assets 19 20 Liabilities and owners' equity: 21 Accounts payable 22 Long-term deby 23 Owners' equity 24 TOZ Domes and USTICIS $50,000 20.000 30,000 120,000 80,000 170.000 $470.000 $72.000 26.000 36,000 112.000 100.000 170.000 S510.000 $70.000 250.000 150.000 $470.000 $90.000 250.000 170.000 $510.000 25 Summerland Company Income Statement 26 27 28 Sales 29 Less operating expenses 30 Net operating income 1 Less interest and taxes 2 Interest expense 3 Tax expense Operating Income $414,000 351.900 62.100 $30,000 10.000 40.000 $22.100 The company paid dividends of $2.100 last year. The "Investment in ABC Company" on the statement of financial position represents an investment in the stock of another company. Required: 35 36 The company paid dividends of $2,100 last year. The "Investment in ABC Company on the statement of financial position 37 represents an investment in the stock of another company. 38 39 Required: 40 41 a) Compute the company's Avergage Operating Assets (AOA) for last year: (3 marks) Show any all workings in her 42 43 24 45 Average Operating Assets 46 47 b) Compute the company's Margin for last vear: (2 marks) 48 49 50 51 Margin 52 53 c) Compute the company's Tumorer for last year: (2 marks) 54 55 56 57 Turnover 58 59d) Compute the company's Return on Investment (ROI) for last vear: (2 marks) 60 51 62 63 ROI 64 65 e The Board of Directors of the Company have set a minimum required return of 20%. 66 What was the company's residual income last year? (2 marks) 67 68 69 70 Residual income 71