The company paid dividends of $198,000 last year. The \"Investment in Balsam Com
ID: 2598927 • Letter: T
Question
The company paid dividends of $198,000 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 company paid dividends of $198,000 last year. The "Investment in Balsam Company" on the statement of financial position represents an investment in the stock of another company.
Financial data for Redstone Company for last year appear below: Redstone Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash Accounts receivable Inventory Plant and equipment (net) Investment in Balsam Company Land (undeveloped) $ 303,000 $337,392 217,000 238,000 407,000 308,000 280,000 169,000 242,000 481,000 256,000 280,000 Total assets $1,731,000 $1,787,392 Liabilities and owners' equity: Accounts payable Long-term debt Owners' equity $ 171,000 $ 188,000 810,000 789,392 810,000 750,000 Total liabilities and owners' equity $1,731,000 $1,787,392Explanation / Answer
1) $ Margin (Net operating income/Sales) 24.00% (532800/2220000) Turnover (Sales/Average operating assets) 1.85 (2220000/1197196) ROI (Margin/Turnover) 12.94% (24/1.85) Note: Average operating assets = ((1731000-280000-256000)+(1787392-308000-280000))/2 = $1197196 2) $ Average operating assets 1197196 Net operating income 532800 Minimum required return on average assets 40% Residual income (net operating income-(minimum required rate of return*Average operating assets) 53921.6