Financial data for Bingham Company for last year appear below: Bingham Company Balance Sheet For the years
Question:
Financial data for Bingham Company for last year appear below:
Bingham Company
Balance Sheet
For the years ended Dec 31 2018 and 2019
ASSETS | Dec 31, 2018 | Dec 31, 2019 |
Cash | 135,000 | 266,000 |
Accounts Receivable | 225,000 | 475,000 |
Inventory | 314,000 | 394,000 |
Plant+Equipment (net) | 940,000 | 860,000 |
Investment in Carr Corp. | 104,000 | 101,000 |
Land | 198,000 | 65,000 |
Total Assets | 1,916,000 | 2,161,000 |
LIABILITIES + EQUITY | ||
Accounts Payable | 88,000 | 119,000 |
Long-Term Debt | 585,000 | 665,000 |
Owner’s equity | 1,243,000 | 1,377,000 |
Total Liabilities + Equity | 1,916,000 | 2,161,000 |
Bingham Company
Income Statement
For the year ended December 31 2019
Dec 31, 2018 | Dec 31, 2019 | |
Sales | 4,040,000 | 4,464,000 |
Operating Expenses | 3,700,000 | 4,291,000 |
Income before Interest + Taxes | 260,000 | 353,000 |
Interest Expense | 55,000 | 90,000 |
Tax Expense | 85,000 | 129,000 |
Operating Income | 120,000 | 134,000 |
The "Investment in Carr Company" on the statement of financial position represents an investment in the stock of another company.
Required:
a) Compute the company's margin, turnover, and return on investment for last year.
b) The Board of Directors of Bingham Company have set a minimum required return of 15%. What was the company's residual income last year?
Expert Answer:
Bingham Company Balance Sheet 2018 2019 Cash 135000 266000 Accounts receivable net 225000 475000 Inv... View the full answer
