The company paid dividends of $144,000 last year. The \"Investment in Balsam Com
ID: 2489267 • Letter: T
Question
The company paid dividends of $144,000 last year. The "Investment in Balsam Company" on the statement of financial position represents an investment in the stock of another company.
Compute the company's margin, turnover, and return on investment for last year. (Round your intermediate calculations and final answers to 2 decimal places.)
The Board of Directors of Redstone has set a minimum required return of 35%. What was the company's residual income last year? (Round your intermediate calculations and final answers to 2 decimal places.)
Financial data for Redstone Company for last year appear below:Explanation / Answer
a 1 net operating margin net operating income / net sales 438900 / 2310000 net operating income / net sales 19% 2 total operating assets turnover net sales / average operating assets 2310000 / 1118332 total operating assets turnover 2.07 3 return on investment net operating income / average operating assets * 100 return on investment 438900 / 1118332 return on investment 39.25% b calculation of residual income net operating income - ( average operating assets * minimum required rate ) residual income 438900 - 1118332 * 35 % residual income 47484 average operating assets opening assets + closing assets / 2 opening assets 288000 + 126000 + 264000 + 442000 1,120,000 closing assets 189663 + 191000 + 286000 + 450000 1,116,663 average operating assets 1120000 + 1116663 / 2 average operating assets 1,118,332