Question

Financial data for Joel de Paris, Inc., for last year follow:

Joel de Paris, Inc. Balance Sheet
	Beginning Balance			Ending Balance
Assets
Cash	$	132,000		$	138,000
Accounts receivable		341,000			484,000
Inventory		566,000			478,000
Plant and equipment, net		891,000			870,000
Investment in Buisson, S.A.		404,000			430,000
Land (undeveloped)		251,000			253,000
Total assets	$	2,585,000		$	2,653,000
Liabilities and Stockholders' Equity
Accounts payable	$	385,000		$	349,000
Long-term debt		1,004,000			1,004,000
Stockholders' equity		1,196,000			1,300,000
Total liabilities and stockholders' equity	$	2,585,000		$	2,653,000

Joel de Paris, Inc. Income Statement
Sales					$	3,900,000
Operating expenses						3,432,000
Net operating income						468,000
Interest and taxes:
Interest expense	$	126,000
Tax expense		204,000				330,000
Net income					$	138,000

The company paid dividends of $34,000 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. Average operating assets 2. Margin % Turnover ROI % 3. Residual income

Answer 1

1.