D E 8 5 Q1. Financial data for Summerland Company for last year appear below: 6 7 Summerland Company Statements of Financial Position 9 10 Beginning Balance Cnum D 11 Assets: 12 Cash $50,000 $72,000 13 Accounts receivable 20,000 26,000 14 Inventory 30,000 36,000 15 Plant and equipment (net) 120,000 112,000 16 Investment in ABC Company 80,000 100,000 17 Land (underdeveloped) 170,000 170,000 18 Total assets $470.000 $510,000 19 20 Liabilities and owners' equity: 21 Accounts payable $70,000 $90,000 22 Long-term deby 250,000 250,000 23 Owners' equity 150,000 170.000 TOT TUDTUs Owners 24 $470.000 $510,000 25 26 Summerland Company 7 Income Statement 8 Sales $414,000 351.900 Less operating expenses 62,100 Net operating income Less interest and taxes: Interest expense $30,000 10,000 40,000 Tax expense SECTION 6 SECTION 5 SECTION 2 SECTION 3 SECTION 4 FORMULA SHEET 25 $510,000 26 Summerland Company 27 Income Statement 28 Sales $414,000 29 Less operating expenses 351.900 30 Net operating income 62,100 31 Less interest and taxes: 32 Interest expense $30,000 33 Tax expense 10.000 40,000 34 Operating Income $22,100 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 here: 42 43 44 45 Average Operating Assets 46 47 b) Compute the company's Margin for last year: (2 marks) 48 49 50 51 Margin 52 SECTION 2 KI SECTION 3 SECTION 4 FORMULA SHEET SECTION 5 SECTION 6 52 53 c) Compute the company's Turnover for last year: (2 marks) 54 55 56 57 Turnover 58 59 d) Compute the company's Return on Investment (ROI) for last year: (2 marks) 60 61 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