Assignment Problem: Financial data for Joel de Paris, Inc., for last year follows:
Joel de Paris, Inc. Balance Sheet
Beginning Balance Ending Balance
Assets Cash$128,000 $133,000
Accounts receivable 330,000 477,000
Inventory 572,000 477,000
Plant and equipment, net 810,000 793,000
Investment in Buisson, S.A. 391,000 427,000
Land (undeveloped) 252,000 250,000
Total assets$2,483,000 $2,557,000
Liabilities and Stockholders' Equity
Accounts payable $374,000 $334,000
Long-term debt 1,048,000 1,048,000
Stockholders' equity 1,061,000 1,175,000
Total liabilities and stockholders' equity$2,483,000 $2,557,000
Joel de Paris, Inc. Income Statement
Sales $4,836,000
Operating expenses 4,062,240
Net operating income 773,760
Interest and taxes:
Interest expense $124,000
Tax expense 198,000 322,000
Net income $451,760
The company paid dividends of $337,760 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%.
Required:
1. Compute the company's average operating assets for last year.
2. Compute the company's margin, turnover, and return on investment (ROI) for last year.
3. What was the company's residual income last year?
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