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Financial data for Hunger Games Company for last year appear below: Hunger Games Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash $120,700
Financial data for Hunger Games Company for last year appear below:
Hunger Games Company | ||
Statements of Financial Position | ||
Beginning Balance | Ending Balance | |
Assets: | ||
Cash | $120,700 | $220,000 |
Accounts receivable | 225,000 | 475,000 |
Inventory | 317,000 | 390,000 |
Plant and equipment (net) | 940,000 | 860,000 |
Investment in Katniss Company | 100,000 | 98,000 |
Land (undeveloped) | 198,000 | 65,000 |
Total assets | $1,900,700 | $2,108,000 |
Liabilities and owners' equity: | ||
Accounts payable | $178,700 | $8,000 |
Long-term debt | 512,000 | 600,000 |
Owners' equity | 1,210,000 | 1,500,000 |
Total liabilities and owners' equity | $1,900,700 | $2,108,000 |
Hunger Games Company | ||
Income Statement | ||
Sales | $4,500,000 | |
Less operating expenses | 4,000,000 | |
Net operating income | 500,000 | |
Less interest and taxes: | ||
Interest expense | $97,000 | |
Tax expense | 127,000 | 224,000 |
Operating Income | $276,000 |
The "Investment in Katniss Company" on the statement of financial position represents an investment in the stock of another company. Required:
1. Compute the company's margin, turnover, and return on investment for last year.
2. The Board of Directors of Hunger Games Company have set a minimum required return of 15%. What was the company's residual income last year?
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