Financial data for Redstone Company for last year appear below: The company paid
ID: 2488984 • Letter: F
Question
Financial data for Redstone Company for last year appear below:
The company paid dividends of $199,000 last year. The "Investment in Balsam Company" on the statement of financial position represents an investment in the stock of another company.
Compute the company's margin, turnover, and return on investment for last year. (Round your intermediate calculations and final answers to 2 decimal places.)
The Board of Directors of Redstone has set a minimum required return of 45%. What was the company's residual income last year? (Round your intermediate calculations and final answers to 2 decimal places.)
The company paid dividends of $199,000 last year. The "Investment in Balsam Company" on the statement of financial position represents an investment in the stock of another company.
Explanation / Answer
Ans a Net Operating Margin Net Opearting Income/Net sales 575000/1150725*100 23.00 Ans a 2 Total operating asset Turnover Net Sales/Average opearting assets 2500000/1150725 2.17 Ans a 3 Return On Investment Net Operating Income/Average Opearting assets*100 49.97 575000/1150725*100 Net Profit Margin=Net Income/Sales*100 254450/2500000*100 10.18 % Total Asset Turnover Net Sales/Average Total assets 2500000/((1769000+1782450)/2) 1.41 Ans b Residual Income Net opearting Income-(Minimum required rate*Average opearting assets) 575000-(.45*1150725) 57173.75 Ans Average Operating assets (260000+157000+288000+496000+217450+149000+284000+450000)/2 1150725 Note land(underdeveloped) and investment are not operating assets Dear student which margin,turnover is not mentioned but I suppose it shoud be operating margin and turnover so I have calculated both operating and net income margin and total asset/average opearting assets turnover But first give priority to the operating section
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