The company paid dividends of $23,000 last year. The “Investment in Buisson, S.A
ID: 2456005 • Letter: T
Question
The company paid dividends of $23,000 last year. The “Investment in Buisson, S.A.” on the balance sheet represents an investment in the shares of another company.
Compute the company’s margin, turnover, and ROI for last year. (Do not round intermediate calculations. Round your answers to 2 decimal place.)
What is the margin, turnover, and ROI?
The board of directors of Joel de Paris Inc. has set a minimum required return of 22%. What was the company’s residual income last year?
What is the residual income?
Financial data for Joel de Paris Inc. for last year follow:Explanation / Answer
1) Profit margin = net profit/sales *100
=701,000/7,700,000*100
=9.1%
Asset turnover=sales/ Average assets
=7700000/(7746000+7734000)/2
=0.99
ROI= Net operating income/Average Assets deployed*100
Net operating income=1,925,000
For Average assets deployed investment in Buisson and land undeveloped will not be considered
=1,925,000/(7000000+7000000)/2
=27.5%
b)Company Residual Income= 1,925,000-(22%*7,000,000)=$385,000