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Financial data for Beaker Company for last year appear below: Beaker Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $ 252,000 $
Financial data for Beaker Company for last year appear below:
Beaker Company | |||||||||||
Statements of Financial Position | |||||||||||
Beginning Balance | Ending Balance | ||||||||||
Assets: | |||||||||||
Cash | $ | 252,000 | $ | 197,853 | |||||||
Accounts receivable | 165,000 | 189,000 | |||||||||
Inventory | 298,000 | 236,000 | |||||||||
Plant and equipment (net) | 470,000 | 445,000 | |||||||||
Investment in Cedar Company | 287,000 | 311,000 | |||||||||
Land (undeveloped) | 410,000 | 410,000 | |||||||||
Total assets | $ | 1,882,000 | $ | 1,788,853 | |||||||
Liabilities and owners' equity: | |||||||||||
Accounts payable | $ | 227,000 | $ | 149,000 | |||||||
Long-term debt | 860,000 | 860,000 | |||||||||
Owners' equity | 795,000 | 779,853 | |||||||||
Total liabilities and owners' equity | $ | 1,882,000 | $ | 1,788,853 | |||||||
Beaker Company | |||||||||||
Income Statement | |||||||||||
Sales | $ | 2,270,000 | |||||||||
Less operating expenses | 1,884,100 | ||||||||||
Net operating income | 385,900 | ||||||||||
Less interest and taxes: | |||||||||||
Interest expense | $ | 104,700 | |||||||||
Tax expense | 127,347 | 232,047 | |||||||||
Net income | $ | 153,853 | |||||||||
The company paid dividends of $169,000 last year. The "Investment in Cedar 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.
b. The Board of Directors of Beaker Company has set a minimum required return of 30%. What was the company's residual income last year?
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