Problem 10-15 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2]

Financial data for Joel de Paris, Inc., for last year follow:

Joel de Paris, Inc. Balance Sheet
	Beginning Balance			Ending Balance
Assets
Cash	$	132,000		$	139,000
Accounts receivable		330,000			483,000
Inventory		574,000			473,000
Plant and equipment, net		804,000			785,000
Investment in Buisson, S.A.		395,000			429,000
Land (undeveloped)		246,000			254,000
Total assets	$	2,481,000		$	2,563,000
Liabilities and Stockholders' Equity
Accounts payable	$	374,000		$	341,000
Long-term debt		1,024,000			1,024,000
Stockholders' equity		1,083,000			1,198,000
Total liabilities and stockholders' equity	$	2,481,000		$	2,563,000

Joel de Paris, Inc. Income Statement
Sales					$	5,022,000
Operating expenses						4,168,260
Net operating income						853,740
Interest and taxes:
Interest expense	$	130,000
Tax expense		199,000				329,000
Net income					$	524,740

The company paid dividends of $409,740 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. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

3. What was the companys residual income last year?