Reference no: EM132580948
Required:
Question 1: Compute the company's margin, turnover, and return on investment for last year.
Question 2: The Board of Directors of Beaker Company have set a minimum required return of 20%. What was the company's residual income last year?
Financial data for Beaker Company for last year appears below:
The company paid dividends of $2,100 last year. The "Investments" on the statement of financial position represents an investment in the stock of another company.
Beaker Company
Income Statement
Sales $ 414,000
Less operating expenses 351,900
Net operating income 62,100
Less interest and taxes:
Interest expenses $ 30,000
Tax expense 10,000 40,000
Operating Income $ 22,100
Beaker Company
Statement of Financial Position
Beginning balance Ending balance
Assets:
Cash $ 50,000 $ 70,000
Accounts Receivable 20,000 25,000
Inventory 30,000 35,000
Plant and Equipment 120,000 110,000
Investments 80,000 100,000
Land(undeveloped) 170,000 170,000
Total: $ 470,000 $ 510,000