Financial data for Beaker Company
AlvinFinancial data for Beaker Company for last year appear below.
Beaker Company | ||
Statement of Financial Position | ||
|
|
|
| Beginning | Ending |
| Balance | Balance |
Assets |
|
|
Cash | $50,000 | $70,000 |
Accounts receivable | 20,000 | 25,000 |
Inventory | 30,000 | 35,000 |
Plant and Equipment (net) | 120,000 | 110,000 |
Investment in Cedar Company | 80,000 | 100,000 |
Land (undeveloped) | 170,000 | 170,000 |
Total Assets | $470,000 | 510,000 |
|
|
|
Liabilities and Owners' Equity |
|
|
Accounts payable | $70,000 | $90,000 |
Long-term debt | 250,000 | 250,000 |
Owner's equity | 150,000 | 170,000 |
Total liabilities and owner's equity | $470,000 | $510,000 |
Beaker Company | ||
Income Statement | ||
|
|
|
Sales |
| $414,000 |
Less Operating Expenses |
| 351,900 |
Net Operating Income |
| 62,100 |
Less Interest and Taxes |
|
|
Interest Expense | $30,000 |
|
Tax Expense | 10,000 | 40,000 |
Net Income |
| $22,000 |
The company paid dividends of $2,100 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.
Required:
i. Compute the company's margin, turnover, and return on investment for last year.
ii. The board of directors of Beaker Company has set a minimum required return of 20%. What was the company's residual income last year?
13 years ago
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financial_data_for_beaker_company_for_last_year_appear_below.docx
