Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2]

Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Ending Balance Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance sheet Beginning Balance Assets Cash $ 125,000 Accounts receivable 339,000 Inventory 570,000 Plant and equipment, net 826,000 Investment in Buisson, S.A. 398,000 Land (undeveloped) 250,000 Total assets $ 2,508,000 Liabilities and stockholders' Equity Accounts payable $ 371,000 Long-term debt 976,000 Stockholders' equity 1,161,000 Total liabilities and stockholders' equity $ 2,508,000 $ 131,000 474,000 483,000 812,000 433,000 250,000 $ 2,583,000 $ 347,000 976,000 1,260,000 $ 2,583,000 Joel de Paris, Inc. Income statement Sales Operating expenses Net operating income Interest and taxes: Interest expense $ 113,000 Tax expense 205,000 Net income $ 4,888,000 4, 154, 800 733,200 318,000 415, 200 $ Total liabilities and stockholders' equity $ 2,508,000 $ 2,583,000 Joel de Paris, Inc. Income Statement Sales Operating expenses Net operating income Interest and taxes: Interest expense $ 113,000 Tax expense 205,000 Net income $ 4,888,000 4,154,800 733,200 318,000 415, 200 $ The company paid dividends of $316,200 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 company's margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.) 3. What was the company's residual income last year? 1. 2. % Average operating assets Margin Turnover ROI % 3. Residual income