Accounting Question - Financial data for Joel de Paris, Inc, for last year follows
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Joel de Paris, Inc Balance Sheet
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Beginning Balance
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Ending Balance
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Assets
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Cash
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$125,000
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$133,000
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Accounts receivable
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348,000
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483,000
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Inventory
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573,000
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476,000
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Plant and equipment, net
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834,000
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828,000
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Investment in Buisson S.A
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391,000
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429,000
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Land (undeveloped)
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254,000
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246,000
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Total assets
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$2,525,000
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$2,595,000
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Liabilities and Stockholders' Equity
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Accounts payable
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$382,000
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$336,000
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Long-term debt
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1,011,000
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1,011,000
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Stockholders' equity
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1,132,000
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1,248,000
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Total liabilities and stockholders' equity
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$2,525,000
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$2,595,000
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Income Statement
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Sales
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$5,130,000
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Operating expenses
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4,514,400
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Net operating income
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615,600
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Interest and taxes:
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Interest expense
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$124,000
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Tax expense
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203,000
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327,000
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Net income
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$288,600
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The company paid dividends of $28,860 last year. The "Investment in Buisson, S.A," on the balance sheet represents an investment in the stock of another company.
Requirement 1 - Compute the company's margin, turnover, and return on investment (ROI) for last year.
Requirement 2 - The board of directors of Joel de Paris, Inc, has set a minimum required return of 18%. What was the company's residual income last year?