1. Compute the companys average operating assets for last year.

2. Compute the companys margin, turnover, and return on investment (ROI) for last year. (Hint: Should you use net income or net operating income in your calculations?)

3. What was the companys residual income last year?

PROBLEM 11-17 Return on Investment (ROI) and Residual Income LO11-1, LO11-2 Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets $ 140,000 450,000 320,000 680,000 250,000 180,000 $2,020,000 $ 120,000 530,000 380,000 620,000 280,000 170,000 $2,100,000 Liabilities and Stockholders' Equity Accounts payable Long-term debt .. Stockholders' equity Total liabilities and stockholders' equity $ 360,000 1,500,000 160,000 $2,020,000 $ 310,000 1,500,000 290,000 $2,100,000 Joel de Paris, Inc. Income Statement $4,050,000 3,645,000 405,000 Sales Operating expenses Net operating income Interest and taxes: Interest expense. Tax expense Net income $150,000 110,000 260,000 $ 145,000 The company paid dividends of $15,000 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%