Juniper Design Ltd. of Manchester, England, is a company specializing in providi

Question

Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $440,000 on sales of $1,600,000. The company’s average operating assets for the year were $1,800,000 and its minimum required rate of return was 13%. Required: Compute the company’s residual income for the year.

Compute the company’s residual income for the year.

average operating assets

net operating income

minimum required return

residual income

Compute the company’s residual income for the year.

average operating assets

net operating income

minimum required return

residual income

Explanation / Answer

Statement showing computations Particulars Amount Net Operating income              440,000.00 Sales          1,600,000.00 Average Operating Assets          1,800,000.00 Required Return 13% Required income= Avg Op Assets *Reqd return = 1,800,000*13%              234,000.00 Residual Income = Net operating income- required income              206,000.00 (440,000 - 234,000) Why have you have asked to compute average operating assets net operating income minimum required return also since they aregiven in the question

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