Question

Financial data for Bridger Inc. for last year are as follows:

BRIDGER INC. Balance Sheet
	Ending Balance			Beginning Balance
Assets
Cash	$	161,000		$	156,000
Accounts receivable		450,000			310,000
Inventory		460,000			540,000
Plant and equipment, net		649,000			674,000
Investment in Brier Company		560,000			530,000
Land (undeveloped)		380,000			380,000
Total assets	$	2,660,000		$	2,590,000
Liabilities and Shareholders’ Equity
Accounts payable	$	450,000		$	490,000
Long-term debt		1,000,000			1,000,000
Shareholders’ equity		1,210,000			1,100,000
Total liabilities and shareholders’ equity	$	2,660,000		$	2,590,000

BRIDGER INC. Income Statement
Sales				$	4,250,000
Operating expenses					3,740,000
Operating income					510,000
Interest and taxes:
Interest expense	$	100,000
Tax expense		180,000			280,000
Net income				$	230,000

The company paid dividends of $128,000 last year. The “Investment in Brier Company” on the balance sheet represents an investment in the common shares of another company.

Required:
1.Compute the company’s margin, turnover, and ROI for last year. (Round your intermediate calculations and final answers to 1 decimal place.)

2. The board of directors of Bridger Inc. has set a minimum required return of 17%. What was the company’s residual income last year?

Answer 1