Question

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		$	138,000
Accounts receivable		346,000			483,000
Inventory		574,000			481,000
Plant and equipment, net		854,000			848,000
Investment in Buisson, S.A.		400,000			432,000
Land (undeveloped)		252,000			250,000
Total assets	$	2,562,000		$	2,632,000
Liabilities and Stockholders' Equity
Accounts payable	$	372,000		$	343,000
Long-term debt		1,003,000			1,003,000
Stockholders' equity		1,187,000			1,286,000
Total liabilities and stockholders' equity	$	2,562,000		$	2,632,000

Joel de Paris, Inc. Income Statement
Sales					$	4,825,000
Operating expenses						4,004,750
Net operating income						820,250
Interest and taxes:
Interest expense	$	123,000
Tax expense		200,000				323,000
Net income					$	497,250

The company paid dividends of $398,250 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. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

3. What was the company’s residual income last year?

Answer 1