Problem # 2

Financial data for Bravo Company for last year appear below:

Bravo Company
Statement of Financial Position
	Beginning Balance	Ending Balance
Assets
Cash	500,000	700,000
Accounts Receivable	200,000	250,000
Inventory	300,000	350,000
Plant and equipment (net)	1,200,000	1,100,000
Investment in Charlie Company	800,000	1,000,000
Land (undeveloped)	1,700,000	1,700,000
Total Assets	4,700,000	5,100,000
Liabilities and owners' equity
Accounts Payable	700,000	900,000
Long-term Debt	2,500,000	2,500,000
Owners' equity	1,500,000	1,700,000
Total Liabilities and Owners' Equity	4,700,000	5,100,000
Bravo Company
Income Statement
Sales		4,140,000
Less: Operating Expenses		3,519,000
Net Operating Income		621,000
Less: Interest Expense	300,000
Tax Expense	100,000	400,000
Net Income		221,000

The company paid dividends of 21,100 last year. The "Investment in Charlie Company" on the statement of financial position represents an investment in the stock of another company.

Required:

1. Compute the company's margin, turnover, and return on investment for last year.
2. The Board of Directors of Bravo Company have set a minimum required return of 20%. What was the company's residual income last year?