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		333,000			477,000
Inventory		562,000			479,000
Plant and equipment, net		873,000			846,000
Investment in Buisson, S.A.		410,000			430,000
Land (undeveloped)		251,000			255,000
Total assets	$	2,561,000		$	2,625,000
Liabilities and Stockholders' Equity
Accounts payable	$	383,000		$	340,000
Long-term debt		989,000			989,000
Stockholders' equity		1,189,000			1,296,000
Total liabilities and stockholders' equity	$	2,561,000		$	2,625,000

Joel de Paris, Inc. Income Statement
Sales					$	5,184,000
Operating expenses						4,406,400
Net operating income						777,600
Interest and taxes:
Interest expense	$	115,000
Tax expense		207,000				322,000
Net income					$	455,600

The company paid dividends of $348,600 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. Using the formula in the Chapter 11, 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