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	$	134,000		$	135,000
Accounts receivable		340,000			490,000
Inventory		572,000			481,000
Plant and equipment, net		874,000			854,000
Investment in Buisson, S.A.		394,000			428,000
Land (undeveloped)		252,000			245,000
Total assets	$	2,566,000		$	2,633,000
Liabilities and Stockholders' Equity
Accounts payable	$	371,000		$	349,000
Long-term debt		1,032,000			1,032,000
Stockholders' equity		1,163,000			1,252,000
Total liabilities and stockholders' equity	$	2,566,000		$	2,633,000

Joel de Paris, Inc. Income Statement
Sales					$	5,238,000
Operating expenses						4,557,060
Net operating income						680,940
Interest and taxes:
Interest expense	$	117,000
Tax expense		208,000				325,000
Net income					$	355,940

The company paid dividends of $266,940 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?

1.	Average operating assets
2.	Margin		%
	Turnover
	ROI		%
3.	Residual income