Question
F8inancial data for Windsor, Inc. for last year appear below: Windsor, Inc. Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $ 331,000 $
F8inancial data for Windsor, Inc. for last year appear below: |
Windsor, Inc. Statements of Financial Position | ||||
Beginning Balance | Ending Balance | |||
Assets: | ||||
Cash | $ | 331,000 | $ | 505,256 |
Accounts receivable | 169,000 | 185,000 | ||
Inventory | 263,000 | 228,000 | ||
Plant and equipment (net) | 451,000 | 388,000 | ||
Investment in Pine Company | 266,000 | 288,000 | ||
Land (undeveloped) | 365,000 | 365,000 | ||
Total assets | $ | 1,845,000 | $ | 1,959,256 |
Liabilities and owners equity: | ||||
Accounts payable | $ | 190,000 | $ | 189,000 |
Long-term debt | 868,000 | 868,000 | ||
Owners equity | 787,000 | 902,256 | ||
Total liabilities and owners equity | $ | 1,845,000 | $ | 1,959,256 |
Windsor, Inc. Income statement | ||||
Sales | $ | 2,080,000 | ||
Less operating expenses | 1,518,400 | |||
Net operating income | 561,600 | |||
Less interest and taxes: | ||||
Interest expense | $ | 100,400 | ||
Tax expense | 190,944 | 291,344 | ||
Net income | $ | 270,256 | ||
The company paid dividends of $155,000 last year. The "Investment in Pine Company" on the statement of financial position represents an investment in the stock of another company. |
Required: | |
a. | Compute the company's margin, turnover, and return on investment for last year. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.) |
Margin | % |
Turnover | |
Return on investment | % |
b. | The Board of Directors of Windsor, Inc. has set a minimum required return of 40%. What was the company's residual income last year? (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.) |
Residual income | $ |
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