Financial data for Beaker Company for last year appear below.
accounting teacherFinancial data for Beaker Company for last year appear below.
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 (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? (Points : 15)
11 years ago
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beaker_company_.doc
