Question
In: Accounting
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
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 | $ | 131,000 | ||
| Accounts receivable | 349,000 | 481,000 | ||||
| Inventory | 565,000 | 481,000 | ||||
| Plant and equipment, net | 842,000 | 837,000 | ||||
| Investment in Buisson, S.A. | 394,000 | 430,000 | ||||
| Land (undeveloped) | 246,000 | 247,000 | ||||
| Total assets | $ | 2,530,000 | $ | 2,607,000 | ||
| Liabilities and Stockholders' Equity | ||||||
| Accounts payable | $ | 374,000 | $ | 346,000 | ||
| Long-term debt | 983,000 | 983,000 | ||||
| Stockholders' equity | 1,173,000 | 1,278,000 | ||||
| Total liabilities and stockholders' equity | $ | 2,530,000 | $ | 2,607,000 | ||
|
Joel de Paris, Inc. Income Statement |
|||||||||
| Sales | $ | 4,011,000 | |||||||
| Operating expenses | 3,529,680 | ||||||||
| Net operating income | 481,320 | ||||||||
| Interest and taxes: | |||||||||
| Interest expense | $ | 128,000 | |||||||
| Tax expense | 201,000 | 329,000 | |||||||
| Net income | $ | 152,320 | |||||||
The company paid dividends of $47,320 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 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?
Solutions
Expert Solution
1. Company's average operating assets for last year
Company's average operating assets for last year = Beginng Balance + Ending Balance / 2
Company's average operating assets for last year = (2530000 - 246000 - 394000 + 2607000 - 247000 - 430000) / 2
Company's average operating assets for last year = $3820000 / 2
Company's average operating assets for last year = $1910000
Land and Investment in other company are not operating assets
2. Company's Margin = Net operating income / Sales
Company's Margin = 481320 / 4011000 = 12.00%
Company's Turnover = Sales / Average operating assets.
Company's Turnover = 4011000 / 1910000 = 2.10 Times
Return on investment (ROI) = Margin * Turnover
Return on investment (ROI) = 2.10 * 12
Return on investment (ROI) = 25.20%
3. Company's Residual Income
Residual income = Net operating income - Minimum required return
Residual income = $481320 - (15 % * 1910000)
Residual income = 481320 - 286500
Residual income = $ 194820
Please Upvote if satsfied
ekkarill92 answered 1 year agoRelated Solutions
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
127,000
$
126,000
Accounts receivable
349,000
477,000
Inventory
570,000
473,000
Plant and equipment, net
864,000
874,000
Investment in Buisson, S.A.
408,000
429,000
Land (undeveloped)
253,000
254,000
Total assets
$
2,571,000
$
2,633,000
Liabilities and Stockholders'
Equity
Accounts payable
$
376,000
$
340,000
Long-term debt
1,035,000
1,035,000
Stockholders' equity
1,160,000
1,258,000
Total liabilities and stockholders' equity
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
136,000
$
134,000
Accounts receivable
336,000
471,000
Inventory
573,000
484,000
Plant and equipment, net
785,000
781,000
Investment in Buisson, S.A.
392,000
431,000
Land (undeveloped)
254,000
252,000
Total assets
$
2,476,000
$
2,553,000
Liabilities
and Stockholders' Equity
Accounts payable
$
382,000
$
349,000
Long-term debt
1,016,000
1,016,000
Stockholders' equity
1,078,000
1,188,000
Total liabilities and
stockholders' equity
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
126,000
$
127,000
Accounts receivable
349,000
490,000
Inventory
567,000
478,000
Plant and equipment, net
848,000
835,000
Investment in Buisson, S.A.
404,000
432,000
Land (undeveloped)
252,000
251,000
Total assets
$
2,546,000
$
2,613,000
Liabilities and Stockholders'
Equity
Accounts payable
$
378,000
$
338,000
Long-term debt
978,000
978,000
Stockholders' equity
1,190,000
1,297,000
Total liabilities and stockholders' equity
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
136,000
$
132,000
Accounts receivable
342,000
487,000
Inventory
561,000
489,000
Plant and equipment, net
831,000
802,000
Investment in Buisson, S.A.
402,000
432,000
Land (undeveloped)
254,000
246,000
Total assets
$
2,526,000
$
2,588,000
Liabilities
and Stockholders' Equity
Accounts payable
$
376,000
$
349,000
Long-term debt
1,002,000
1,002,000
Stockholders' equity
1,148,000
1,237,000
Total liabilities and
stockholders' equity
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance
Assets Cash $ 133,000 $ 133,000 Accounts receivable 338,000 475,000
Inventory 568,000 490,000 Plant and equipment, net 811,000 792,000
Investment in Buisson, S.A. 405,000 432,000 Land (undeveloped)
245,000 254,000 Total assets $ 2,500,000 $ 2,576,000 Liabilities
and Stockholders' Equity Accounts payable $ 387,000 $ 335,000
Long-term debt 1,003,000 1,003,000 Stockholders' equity 1,110,000
1,238,000 Total liabilities and stockholders' equity $...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
131,000
$
126,000
Accounts receivable
331,000
485,000
Inventory
574,000
489,000
Plant and equipment, net
894,000
870,000
Investment in Buisson, S.A.
405,000
432,000
Land (undeveloped)
248,000
248,000
Total assets
$
2,583,000
$
2,650,000
Liabilities and Stockholders'
Equity
Accounts payable
$
377,000
$
337,000
Long-term debt
1,044,000
1,044,000
Stockholders' equity
1,162,000
1,269,000
Total liabilities and stockholders' equity
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
133,000
$
135,000
Accounts receivable
343,000
473,000
Inventory
570,000
483,000
Plant and equipment, net
874,000
869,000
Investment in Buisson, S.A.
393,000
432,000
Land (undeveloped)
247,000
246,000
Total assets
$
2,560,000
$
2,638,000
Liabilities and Stockholders'
Equity
Accounts payable
$
388,000
$
330,000
Long-term debt
999,000
999,000
Stockholders' equity
1,173,000
1,309,000
Total liabilities and stockholders' equity
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
139,000
$
136,000
Accounts receivable
348,000
477,000
Inventory
560,000
489,000
Plant and equipment, net
793,000
778,000
Investment in Buisson, S.A.
406,000
435,000
Land (undeveloped)
252,000
250,000
Total assets
$
2,498,000
$
2,565,000
Liabilities and Stockholders' Equity
Accounts payable
$
386,000
$
346,000
Long-term debt
956,000
956,000
Stockholders' equity
1,156,000
1,263,000
Total liabilities and
stockholders' equity
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
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
$...
Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance...
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
Ending
Balance
Assets
Cash
$
135,000
$
126,000
Accounts receivable
330,000
488,000
Inventory
562,000
485,000
Plant and equipment, net
843,000
811,000
Investment in Buisson, S.A.
396,000
428,000
Land (undeveloped)
247,000
247,000
Total assets
$
2,513,000
$
2,585,000
Liabilities and Stockholders'
Equity
Accounts payable
$
374,000
$
346,000
Long-term debt
995,000
995,000
Stockholders' equity
1,144,000
1,244,000
Total liabilities and stockholders' equity
$...
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