The company paid dividends of $108,720 last year. The “Investment in Buisson, S.
ID: 2498675 • Letter: T
Question
The company paid dividends of $108,720 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company
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.))
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? Please calculate the Net Operating Income, Mininum Required Return and Residual Income.
Financial data for Joel de Paris, Inc., for last year follow:
Explanation / Answer
Answer:1 Operating assets do not include investments in other companies or in undeveloped land:
Average operating assets = ($1,860,000 + $1900,000)/2 = $1,880,000
Margin = Net Operating Income/Sales = $552,720 / $3,948,000 = 14%
Turnover = Sales / Average Operating Assets = $3,948,000 / $1,880,000 = 2.1
ROI = Margin x Turnover = 14% x 2.1 = 29.4%
Answer: 2
$552720
282,000
$270720
Particulars Beginning balance Ending balance Cash 125000 136000 Accounts receivable 338000 471000 Inventory 562000 474000 Plant and equipment (Net) 835000 819000 Total operating assets 1860000 1900000