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	$	130,000		$	136,000
Accounts receivable		334,000			489,000
Inventory		562,000			489,000
Plant and equipment, net		804,000			756,000
Investment in Buisson, S.A.		398,000			435,000
Land (undeveloped)		254,000			250,000
Total assets	$	2,482,000		$	2,555,000
Liabilities and Stockholders' Equity
Accounts payable	$	382,000		$	337,000
Long-term debt		993,000			993,000
Stockholders' equity		1,107,000			1,225,000
Total liabilities and stockholders' equity	$	2,482,000		$	2,555,000

Joel de Paris, Inc. Income Statement
Sales					$	3,885,000
Operating expenses						3,263,400
Net operating income						621,600
Interest and taxes:
Interest expense	$	114,000
Tax expense		198,000				312,000
Net income					$	309,600

The company paid dividends of $191,600 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?