Blackstone company
Statements of financial position
Beginning balance Ending balance
Assets
Cash 130,000 170,000
Accounts receivable 100,000 130,000
Plant and equipment (net) 180,000 150,000
Investment in balsam co. 50,000 60,0000
Goodwill 120,000 120,000
Total assets $580,000 $630,000
Liabilities and owners equity:
Accounts payable 220,000 250,000
Other liabilities 100,000 80,000
Owner’s equity 260,000 300,000
Total liabilities and owner’s equity $580,000 $630,000
Blackstone Company
Income Statement
Sales $1,1335,000
Less operating expense 1,214,850
Net operating income 120,150
Less tax expense 40,000
Net income $80,150
Other info: The company paid dividends of $32,200 last year. The “investment in balsam company” on the statement of financial position represents an investment in the stock of another company.
A) What is the company’s margin, turnover and return on investment for last year?
B) The Board of Directors of Blackstone has set a minimum required return of 25%. What was the company’s residual income last year?