Question

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

$

140,000

Accounts receivable

330,000

478,000

Inventory

572,000

472,000

Plant and equipment, net

853,000

840,000

Investment in Buisson, S.A.

394,000

430,000

Land (undeveloped)

250,000

249,000

Total assets

$

2,534,000

$

2,609,000

Liabilities and Stockholders' Equity

Accounts payable

$

375,000

$

343,000

Long-term debt

1,049,000

1,049,000

Stockholders' equity

1,110,000

1,217,000

Total liabilities and stockholders' equity

$

2,534,000

$

2,609,000

   

Joel de Paris, Inc.
Income Statement

Sales

$

4,775,000

Operating expenses

3,915,500

Net operating income

859,500

Interest and taxes:

Interest expense

114,000

Tax expense

197,000

311,000

Net income

$

548,500


The company paid dividends of $441,500 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 1 decimal place.)

Margin

%

Turnover

times

ROI

%

2. The board of directors of Joel de Paris, Inc., has set a minimum required rate of return of 15%. What was the company’s residual income last year?

Net operating income

Minimum required return

Residual income

$0

Homework Answers

Answer #1

Margin :-

= Net operating income / sales

=859,500/4,775,000

= 18%

Turnover :-

= Sales/ Average operating assets

=4,775,000/1,910,000

=2.5 times

ROI :-

= Net operating income / Average operating assets

= 859,500/1,910,000

= 45%

Net operating income ......... 859,500

Minimum required returns......(286,500) [1,910,000 x 15%]

Residual Income................. = $573,000

Calculation of Average operating assets:-

{(Beginning total assets - beginning land - beginning investment) +

(Ending total assets - ending land - ending investment)} / 2

={(2,534,000-394000-250000) + (2,609,000-430,000-249,000)}/2

=(1890000+1930000)/2

=$1,910,000

(Your feedback really means a lot to me....please rate)

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 $ 130,000 $ 132,000   Accounts receivable 336,000 476,000   Inventory 561,000 475,000   Plant and equipment, net 893,000 877,000   Investment in Buisson, S.A. 394,000 432,000   Land (undeveloped) 250,000 248,000   Total assets $ 2,564,000 $ 2,640,000 Liabilities and Stockholders' Equity   Accounts payable $ 383,000 $ 338,000   Long-term debt 1,039,000 1,039,000   Stockholders' equity 1,142,000 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 $ 126,000 $ 135,000 Accounts receivable 338,000 486,000 Inventory 568,000 472,000 Plant and equipment, net 798,000 777,000 Investment in Buisson, S.A. 394,000 426,000 Land (undeveloped) 249,000 247,000 Total assets $ 2,473,000 $ 2,543,000 Liabilities and Stockholders' Equity Accounts payable $ 372,000 $ 343,000 Long-term debt 1,022,000 1,022,000 Stockholders' equity 1,079,000 1,178,000 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 $ 127,000 $ 129,000 Accounts receivable 332,000 476,000 Inventory 572,000 488,000 Plant and equipment, net 849,000 827,000 Investment in Buisson, S.A. 396,000 434,000 Land (undeveloped) 245,000 246,000 Total assets $ 2,521,000 $ 2,600,000 Liabilities and Stockholders' Equity Accounts payable $ 376,000 $ 331,000 Long-term debt 1,041,000 1,041,000 Stockholders' equity 1,104,000 1,228,000 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 $ 130,000 $ 132,000 Accounts receivable 332,000 480,000 Inventory 572,000 480,000 Plant and equipment, net 826,000 808,000 Investment in Buisson, S.A. 405,000 431,000 Land (undeveloped) 246,000 253,000 Total assets $ 2,511,000 $ 2,584,000 Liabilities and Stockholders' Equity Accounts payable $ 383,000 $ 335,000 Long-term debt 977,000 977,000 Stockholders' equity 1,151,000 1,272,000 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 $ 134,000 $ 139,000 Accounts receivable 330,000 474,000 Inventory 564,000 472,000 Plant and equipment, net 842,000 825,000 Investment in Buisson, S.A. 407,000 433,000 Land (undeveloped) 251,000 251,000 Total assets $ 2,528,000 $ 2,594,000 Liabilities and Stockholders' Equity Accounts payable $ 385,000 $ 338,000 Long-term debt 1,013,000 1,013,000 Stockholders' equity 1,130,000 1,243,000 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$130,000 $127,000 Accounts receivable 343,000  485,000 Inventory 579,000  478,000 Plant and equipment, net 788,000  790,000 Investment in Buisson, S.A. 401,000  426,000 Land (undeveloped) 246,000  255,000 Total assets$2,487,000 $2,561,000 Liabilities and Stockholders' Equity Accounts payable$381,000 $332,000 Long-term debt 969,000  969,000 Stockholders' equity 1,137,000  1,260,000 Total liabilities and stockholders' equity$2,487,000 $2,561,000 Joel de Paris, Inc. Income Statement Sales    $5,022,000 Operating expenses     4,318,920 Net operating income     703,080 Interest and taxes:        Interest...
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 $ 128,000 Accounts receivable 339,000 480,000 Inventory 577,000 475,000 Plant and equipment, net 878,000 877,000 Investment in Buisson, S.A. 394,000 432,000 Land (undeveloped) 254,000 249,000 Total assets $ 2,568,000 $ 2,641,000 Liabilities and Stockholders' Equity Accounts payable $ 376,000 $ 347,000 Long-term debt 988,000 988,000 Stockholders' equity 1,204,000 1,306,000 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 $ 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 $ 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 $...