Question

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	$	125,000
Accounts receivable		340,000		477,000
Inventory		577,000		488,000
Plant and equipment, net		790,000		790,000
Investment in Buisson, S.A.		395,000		432,000
Land (undeveloped)		248,000		252,000
Total assets	$	2,483,000	$	2,564,000
Liabilities and Stockholders' Equity
Accounts payable	$	371,000	$	337,000
Long-term debt		1,020,000		1,020,000
Stockholders' equity		1,092,000		1,207,000
Total liabilities and stockholders' equity	$	2,483,000	$	2,564,000

Joel de Paris, Inc. Income Statement
Sales		$	4,650,000
Operating expenses			3,813,000
Net operating income			837,000
Interest and taxes:
Interest expense	$ 123,000
Tax expense	201,000		324,000
Net income		$	513,000

     The company paid dividends of $398,000 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 Turnover answer to 1 decimal place. Round your Margin and ROI percentage answers to 1 decimal place (i.e 0.123 should be entered as 12.3.))

       

2.	The board of directors of Joel de Paris, Inc., has set a minimum required rate of return of 20%. What was the company’s residual income last year?

      

Answer 1