PROBLEM $11-17$ Return on Investment $($ROI$)$ and Residual Income

Financial data for Joel de Paris, Inc, for last year follow.

$\backslash$table$[[\backslash$table$[[$Joel de Paris, Inc.$],[$Balance Sheet$]]],[,\backslash$table$[[$Beginning$],[$Balance$]],\backslash$table$[[$Ending$],[$Balance$]]],[$Assets$],[$Cash$,$$ $140,000,$$ $120,000],[$Accounts receivable,$450,000,530,000],[$Inventory$,320,000,380,000],[$Plant and equipment, nat,$680,000,620,000],[$Investment in Buisson, S$.$A$.,250,000,280,000],[$Land $($undeveloped$),180,000,170,000],[$Total assets,$$2,020,000,$$$2,100,000],[$Liabilities and Stockholders' Equity$],[$Accounts payable,$ $360,000,$$ $310,000],[$Longterm debt,$1,500,000,1,500,000],[$Stockholders$\text{'}$ equity,$160,000,290,000],[$Total liabilities and stockholders" equity,$$2,020,000,$$$2,100,000]]$

$\backslash$table$[[\backslash$table$[[$Joel de Paris, Inc.$],[$Income Statement$]]],[$Sales$,,$$$4,050,000],[$Operating expenses,,$3,645,000],[$Net operating income,,$405,000],[$Interest and taxes:,,$],[$Interest expense,$$150,000,],[$Tax expense,$110,000,260,000],[$Net income,,$ $145,000]]$

The company paid dividends of $$15,000$ last year. The "Investment in Buisson, S$.$A$."$ on the balance shest represents an investment in the stock of another company. The company's minimum required rate of retum of $15\%.$

Required:

Compute the company's average operating assets for last year.

Page $529$

Compute the company's margin, turnover, and return on investment $($ROI$)$ for last year. $($Hint: Should you use nat income or nat operating income in your calculations?$)$

What was the company's residual income last year?