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Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2]
Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc. Balance Sheet | ||||||
Beginning Balance | Ending Balance | |||||
Assets | ||||||
Cash | $ | 126,000 | $ | 128,000 | ||
Accounts receivable | 339,000 | 480,000 | ||||
Inventory | 577,000 | 475,000 | ||||
Plant and equipment, net | 878,000 | 877,000 | ||||
Investment in Buisson, S.A. | 394,000 | 432,000 | ||||
Land (undeveloped) | 254,000 | 249,000 | ||||
Total assets | $ | 2,568,000 | $ | 2,641,000 | ||
Liabilities and Stockholders' Equity | ||||||
Accounts payable | $ | 376,000 | $ | 347,000 | ||
Long-term debt | 988,000 | 988,000 | ||||
Stockholders' equity | 1,204,000 | 1,306,000 | ||||
Total liabilities and stockholders' equity | $ | 2,568,000 | $ | 2,641,000 | ||
Joel de Paris, Inc. Income Statement | |||||||||
Sales | $ | 4,268,000 | |||||||
Operating expenses | 3,499,760 | ||||||||
Net operating income | 768,240 | ||||||||
Interest and taxes: | |||||||||
Interest expense | $ | 118,000 | |||||||
Tax expense | 200,000 | 318,000 | |||||||
Net income | $ | 450,240 | |||||||
The company paid dividends of $348,240 last year. The Investment in Buisson, S.A., on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%.
Required:
1. Compute the company's average operating assets for last year.
2. Compute the companys margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.)
3. What was the companys residual income last year?
Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Merchandise Purchases Budget for November and December. November December Merchandise Purchases Budget Cost of goods sold Total needs Required purchases
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