finance questions.
1. Selected sales and operating data for three divisions of different structural engineering firms are given below:
Division A Division B Division C
Sales $ 16,200,000 $ 28,960,000 $ 26,200,000
Average operating assets $ 3,240,000 $ 7,240,000 $ 5,240,000
Net operating income $ 761,400 $ 463,360 $ 655,000
Minimum required rate of return 7.00% 7.50% 12.50%
Required:
Compute each division’s margin, turnover, and return on investment (ROI).
Compute each division’s residual income (loss).
Assume each division is presented with an investment opportunity yielding a 8% rate of return.
If performance is being measured by ROI, which division or divisions will accept the opportunity?
If performance is being measured by residual income, which division or divisions will accept the opportunity?
2. Financial data for Joel de Paris, Incorporated, for last year follow:
Joel de Paris, Incorporated Balance Sheet
Beginning Balance Ending Balance
Assets
Cash $ 135,000 $ 138,000
Accounts receivable 331,000 490,000
Inventory 567,000 490,000
Plant and equipment, net 847,000 802,000
Investment in Buisson, S.A. 404,000 431,000
Land (undeveloped) 247,000 250,000
Total assets $ 2,531,000 $ 2,601,000
Liabilities and Stockholders’ Equity
Accounts payable $ 376,000 $ 331,000
Long-term debt 978,000 978,000
Stockholders’ equity 1,177,000 1,292,000
Total liabilities and stockholders’ equity $ 2,531,000 $ 2,601,000
Joel de Paris, Incorporated
Income Statement
Sales $ 5,130,000
Operating expenses 4,514,400
Net operating income 615,600
Interest and taxes:
Interest expense $ 123,000
Tax expense 200,000 323,000
Net income $ 292,600
The company paid dividends of $177,600 last year. The “Investment in Buisson, S.A.,” on the balance sheet represents an investment in the stock of another company. The company’s minimum required rate of return 15%.
Required:
Compute the company’s average operating assets for last year.
Compute the company’s margin, turnover, and return on investment (ROI) for last year.Note: Round “Margin”, “Turnover” and “ROI” to 2 decimal places.
What was the company’s residual income last year?
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
