The company paid dividends of $178,000 last year. The \"Investment in Balsam Com
ID: 2593155 • Letter: T
Question
The company paid dividends of $178,000 last year. The "Investment in Balsam Company" on the statement of financial position represents an investment in the stock of another company.
Compute the company's margin, turnover, and return on investment for last year. (Round your intermediate calculations and final answers to 2 decimal places.)
The Board of Directors of Redstone has set a minimum required return of 15%. What was the company's residual income last year? (Round your intermediate calculations and final answers to 2 decimal places.)
Financial data for Redstone Company for last year appear below:
Explanation / Answer
a. Company's margin, turnover, and return on investment for last year is as computed below:
Sales margin is the Income divided by the sales revenue.
Sales margin divided by the invested capital is referred as capital turnover. It is the number of sales dollars generated by every dollar of invested capital.
b. company's residual income last year
Particulars Amount ($) Income from operations (a) 206,000 Sales (b) 2,060,000 Profit Margin (a/b) 10.00%