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