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Problem 11-15 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	$	126,000		$	128,000
Accounts receivable		339,000			480,000
Inventory		577,000			475,000
Plant and equipment, net		878,000			877,000
Investment in Buisson, S.A.		394,000			432,000
Land (undeveloped)		254,000			249,000
Total assets	$	2,568,000		$	2,641,000
Liabilities and Stockholders' Equity
Accounts payable	$	376,000		$	347,000
Long-term debt		988,000			988,000
Stockholders' equity		1,204,000			1,306,000
Total liabilities and stockholders' equity	$	2,568,000		$	2,641,000

Joel de Paris, Inc. Income Statement
Sales					$	4,268,000
Operating expenses						3,499,760
Net operating income						768,240
Interest and taxes:
Interest expense	$	118,000
Tax expense		200,000				318,000
Net income					$	450,240

The company paid dividends of $348,240 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 companys margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 decimal places.)

3. What was the companys residual income last year?

Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Merchandise Purchases Budget for November and December. November December Merchandise Purchases Budget Cost of goods sold Total needs Required purchases