Question

The following data pertains to Timmins Company’s operations last year: Return on investment (ROI)……………….. 20% Sales…………………………………………....

The following data pertains to Timmins Company’s operations last year:

Return on investment (ROI)………………..

20%

Sales………………………………………….

$800,000

Margin………………………………………...

5%

Minimum required rate of return……………

16%

Please provide below:

A. Compute the company’s average operating assets.

B. Compute the company’s residual income for the year.

Homework Answers

Answer #1
Margin =   net income /sales
5%         = x /800,000
hence margin (x) = 800,000*5%
40000
a) ROI             = net operating income/average operating assets
20%            =40,000/x
average operating assets = 40,000/20%
200000 answer
b) Residual income
net operating income - ( average operating assets*min rate of return)
40,000 - (200,000*16%)
8000 answer
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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 $ 131,000 Accounts receivable 336,000 489,000 Inventory 577,000 489,000 Plant and equipment, net 842,000 821,000 Investment in Buisson, S.A. 407,000 427,000 Land (undeveloped) 246,000 255,000 Total assets $ 2,543,000 $ 2,612,000 Liabilities and Stockholders' Equity Accounts payable $ 375,000 $ 330,000 Long-term debt 976,000 976,000 Stockholders' equity 1,192,000 1,306,000 Total liabilities and stockholders' equity $...
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Financial data for Joel de...
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] 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 $ 133,000 Accounts receivable 334,000 489,000 Inventory 572,000 478,000 Plant and equipment, net 828,000 800,000 Investment in Buisson, S.A. 402,000 430,000 Land (undeveloped) 249,000 255,000 Total assets $ 2,511,000 $ 2,585,000 Liabilities and Stockholders' Equity Accounts payable $ 374,000 $ 346,000 Long-term debt 1,041,000...
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Financial data for Joel de...
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 140,000 $ 125,000 Accounts receivable 343,000 473,000 Inventory 567,000 479,000 Plant and equipment, net 820,000 833,000 Investment in Buisson, S.A. 401,000 429,000 Land (undeveloped) 247,000 245,000 Total assets $ 2,518,000 $ 2,584,000 Liabilities and Stockholders' Equity Accounts payable $ 380,000 $ 341,000 Long-term debt 1,041,000...
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Financial data for Joel de...
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] 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 $ 139,000   Accounts receivable 339,000 488,000   Inventory 567,000 484,000   Plant and equipment, net 791,000 759,000   Investment in Buisson, S.A. 402,000 427,000   Land (undeveloped) 247,000 247,000   Total assets $ 2,479,000 $ 2,544,000 Liabilities and Stockholders' Equity   Accounts payable $ 372,000 $ 346,000   Long-term debt 1,014,000...
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 $ 131,000 Accounts receivable 342,000 480,000 Inventory 575,000 471,000 Plant and equipment, net 790,000 798,000 Investment in Buisson, S.A. 391,000 435,000 Land (undeveloped) 253,000 255,000 Total assets $ 2,484,000 $ 2,570,000 Liabilities and Stockholders' Equity Accounts payable $ 389,000 $ 334,000 Long-term debt 951,000 951,000 Stockholders' equity 1,144,000 1,285,000 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 $ 137,000 $ 139,000 Accounts receivable 345,000 489,000 Inventory 572,000 481,000 Plant and equipment, net 816,000 801,000 Investment in Buisson, S.A. 409,000 431,000 Land (undeveloped) 254,000 249,000 Total assets $ 2,533,000 $ 2,590,000 Liabilities and Stockholders' Equity Accounts payable $ 375,000 $ 338,000 Long-term debt 992,000 992,000 Stockholders' equity 1,166,000 1,260,000 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 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 $...
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 $ 140,000 $ 128,000 Accounts receivable 339,000 489,000 Inventory 561,000 474,000 Plant and equipment, net 870,000 859,000 Investment in Buisson, S.A. 393,000 432,000 Land (undeveloped) 254,000 253,000 Total assets $ 2,557,000 $ 2,635,000 Liabilities and Stockholders' Equity Accounts payable $ 389,000 $ 332,000 Long-term debt 1,018,000 1,018,000 Stockholders' equity 1,150,000 1,285,000 Total liabilities and stockholders' equity $...
Please show me step by step for better understanding. Exercise 10-9 Return on Investment (ROI) and...
Please show me step by step for better understanding. Exercise 10-9 Return on Investment (ROI) and Residual Income Relations [LO10-1, LO10-2] A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent.) Company A B C Sales $9,000,000 $7,000,000 $4,500,000 Net operating income $280,000...
Westerville Company reported the following results from last year’s operations:        Sales   $   1,500,000 Variable...
Westerville Company reported the following results from last year’s operations:        Sales   $   1,500,000 Variable expenses      690,000 Contribution margin      810,000 Fixed expenses      435,000 Net operating income   $   375,000 Average operating assets   $   1,250,000 At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:        Sales   $   420,000      Contribution margin ratio      70   % of sales Fixed expenses   $   252,000      The company’s minimum required...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT