Problem 9-17B Return on Investment (ROI) and Residual Income [LO9-1, LO9-2]

Financial data for Stirling, Inc., for last year are as follows:

Stirling, Inc. Balance Sheet
	Beginning Balance		Ending Balance
Assets
Cash	$	158,000	$	155,000
Accounts receivable		391,000		535,000
Inventory		639,000		554,000
Plant and equipment, net		988,000		972,000
Investment in Brier Company		462,000		486,000
Land (undeveloped)		284,000		288,000
Total assets	$	2,922,000	$	2,990,000
Liabilities and Stockholders' Equity
Accounts payable	$	438,000	$	396,000
Long-term debt		1,107,000		1,107,000
Stockholders' equity		1,377,000		1,487,000
Total liabilities and stockholders' equity	$	2,922,000	$	2,990,000

Stirling, Inc. Income Statement
Sales		$	6,164,000
Operating expenses			5,135,520
Net operating income			1,028,480
Interest and taxes:
Interest expense	$ 187,000
Tax expense	268,000		455,000
Net income		$	573,480

The company paid dividends of $292,480 last year. The "Investment in Brier Company" on the balance sheet represents an investment in the stock of another company.

Required:
1.	Compute the companys margin, turnover, and return on investment (ROI) for last year. (Do not round intermediate calculations. Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

2.	The board of directors of Stirling, Inc., has set a minimum required return of 16%. What was the companys residual income last year?