Explore BrainMass

Residual income and ROI

Financial data for Joal de Paris Inc for last year is as follows (see attachment)
The company paid dividends of $15,000 last year. The "Investment in Buisson, SA on the balance sheet represents an investment in stock of another company.
1. Compute the company's margin, turnover, and ROI for last year.
2. The board of directors of Joel de paris has a set minimum required rate of return of 15%. What was the company's residual income last year?


Solution Preview

1. Margin = Net Operating Income/Sales = 405,000/4,050,000 = 10%
Turnover = Sales/Average Operating Assets
Average Operating Assets = ...

Solution Summary

The solution explains the calculation of residual income and ROI