Question

Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 130,000 $ 129,000 Accounts receivable 347,000 485,000 Inventory 569,000 489,000 Plant and equipment, net 864,000 847,000 Investment in Buisson, S.A. 397,000 425,000 Land (undeveloped) 251,000 253,000 Total assets $ 2,558,000 $ 2,628,000 Liabilities and Stockholders' Equity Accounts payable $ 390,000 $ 336,000 Long-term debt 998,000 998,000 Stockholders' equity 1,170,000 1,294,000 Total liabilities and stockholders' equity $ 2,558,000 $ 2,628,000 Joel de Paris, Inc. Income Statement Sales $ 4,439,000 Operating expenses 3,861,930 Net operating income 577,070 Interest and taxes: Interest expense $ 124,000 Tax expense 205,000 329,000 Net income $ 248,070 The company paid dividends of $124,070 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company. Required: 1. Compute the company’s margin, turnover, and return on investment (ROI) for last year. (Round your answers to 2 decimal places.) 2. The board of directors of Joel de Paris, Inc., has set a minimum required rate of return of 21%. What was the company’s residual income last year?

Answer 1