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	$	140,000		$	133,000
Accounts receivable		339,000			471,000
Inventory		561,000			471,000
Plant and equipment, net		810,000			815,000
Investment in Buisson, S.A.		392,000			433,000
Land (undeveloped)		247,000			246,000
Total assets	$	2,489,000		$	2,569,000
Liabilities and Stockholders' Equity
Accounts payable	$	386,000		$	346,000
Long-term debt		1,013,000			1,013,000
Stockholders' equity		1,090,000			1,210,000
Total liabilities and stockholders' equity	$	2,489,000		$	2,569,000

Joel de Paris, Inc. Income Statement
Sales					$	3,927,000
Operating expenses						3,298,680
Net operating income						628,320
Interest and taxes:
Interest expense	$	124,000
Tax expense		192,000				316,000
Net income					$	312,320

The company paid dividends of $192,320 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. 2. Average operating assets Margin Turnover % ROI % 3. Residual income