Ever Wares is a division of a major corporation. Financial data for the last yea

Question

Ever Wares is a division of a major corporation. Financial data for the last year is as follows Ever Wares Balance Sheet Ending Balance Beginning Balance Cash Accounts Receivable (Net) Inventory Prepaid Insurance . 238,503 682,420 218,049 702,497 1,985,683 846,224 12,099 3,621 781,993 10,593 3,902 783,039 Long Investment - Available for Sale Securities Plant and Equipment (Net of Depreciation) Land (Held for future expansion) Total Assets 2,509,441 2.049,950 299.000 299,000 6.512,581 5913,433 S 838,331 S 898,958 2,424,636 2,399,301 500,000 750,000 Long-term Debt . . . Common Stock ($10 par) Paid-In Capital in excess of Par Retained Earnings. Total Liabilities and Shareholders Equity 500,000 750,000 1,999,6141365.174 S 6,512,581 S 5,913433 Ever Wares Income Statement $ 14,720,000 10,843.000 3,877,000 2,745,048 1,131,952 128,971 84,862 1,176,061 411.621 440 Sales Cost of Goods Sold Gross Margin Operating Expenses Gain on the sales of AFS Securities Interest Expense Net Income Before Taxes Income Tax Expense Net Income

Explanation / Answer

a)Margin=net profit/sales)*100
=764440/14720000=5.19%
b)Turnover= sales/Average total assets
=14720000/((6512581+5913433)/2)=2.37
c)ROI= net income/total investment
=764440/((6512581+5913433)/2)=12.30%
d)Residual income=Net operating income-(Average operating assets*min return)
=1131952-(((6512581+5913433)/2)*15%)
=200000.95

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