Reference no: EM132603699

Financial data for Beaker Company for last year appear below:

Beaker Company Statements of Financial Position

                                                    Beginning Balance                 Ending Balance

Assets:

Cash                                                 $277,000                               $136,386

Accounts receivable                              179,000                                    205,000

Inventory                                               257,000                                 270,000

Plant and equipment (net)                              476,000                            440,000

Investment in Cedar Company                            255,000                           288,000

Land (undeveloped)                                           335,000                          335,000

Total assets                                             $1,779,000                           $1,674,386

Liabilities and owners' equity:

Accounts payable                                           $203,000                              $152,000

Long-term debt                                                862,000                                 862,000

Owners' equity                                                 714,000                                 660,386

Total liabilities and owners' equity                          $1,779,000                       $1,674,386

Beaker CompanyIncome Statement

Sales $1,960,000

Less operating expenses 1,597,400

Net operating income 362,600

Less interest and taxes:

Interest expense $105,800

Tax expense 141,414

                     247,214

Net income $115,386

Required:

Question a. Compute the company's margin, turnover, and return on investment for last year.

Question b. The Board of Directors of Beaker Company has set a minimum required return of 30%. What was the company's residual income last year?