Question
Financial data for Joel De Paris, Incorporated, for the last year follow: Joel De Paris, Incorporated Balance Sheet Beginning Balance Ending Balance Assets Cash $131,000
Financial data for Joel De Paris, Incorporated, for the last year follow:
Joel De Paris, Incorporated
Balance Sheet Beginning Balance Ending Balance
Assets
| ||
Cash
| $131,000 | $129,000 |
Accounts Receivable
| 342,000 | 477,000 |
Inventory | 572,000 | 488,000 |
Plant and equipment, net | 795,000 | 786,000 |
Investment in Buisson, SA | 405,000 | 429,000 |
Land (undeveloped) | 254,000 | 251,000 |
Total assets | $2,499,000 | $2,560,000 |
Liabilities and Stockholders Equity | ||
Accounts payable | $388,000 | $332,000 |
Long term debt | 956,000 | 956,000 |
Stockholders equity | 1,155,000 | 1,272,000 |
Total liabilities and stockholders equity | $2,499,000 | $2,560,000 |
Joel De Paris, Incorporated
Income Statement
Sales
| $5,208,000 |
Operating Expenses | 4, 374,720 |
Net operating Income | 833,280 |
Interest and taxes: | |
Interest expense | $113,000 |
Tax expense | 200,000 total: 313,000 |
Net income | $520,280 |
The company paid dividends of $403,280 last year. The Investment in Bussion, SA on the balance sheet represents an investment in the stock of another company. The companys minimum required rate of return 15%.
Required:
Compute the companys return on investment (ROI) for the last year.
What was the companys residual income last year?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started