Managerial Accounting: P10-2 Financial data for Joel de Paris, Inc.

Managerial Accounting
P10-2A Return on Investment (ROI) and Residual Income
Financial data for Joel de Paris, Inc., for last year follow:
Joel de Paris, Inc.
Balance Sheet
Beginning Balance Ending Balance
  Cash 135,000 205,000
  Accounts receivable 540,000 455,000
  Inventory 360,000 310,000
  Plant and equipment, net 585,000 610,000
  Investment in Buisson, S.A. 270,000 245,000
  Land (undeveloped) 190,000 180,000
Total assets $2,080,000 $2,005,000

Liabilities and Stockholders' Equity
  Accounts payable 285,000 370,000
  Long-term debt 1,700,000 1,600,000
  Stockholders' equity 95,000 35,000
Total liabilities and stockholders' equity $2,080,000 $2,005,000

Joel de Paris, Inc.
Income Statement
Sales 4,000,000
Operating expenses 3,680,000
Net operating income 320,000
Interest and taxes:
     Interest expense 160,000
    Tax expense 70,000 230,000
Net income $90,000

The company paid dividends of $30,000 last year. The "Investment in Buisson, S.A." on the balance sheet represents an investment in the stock of another company.

1. Compute the company's margin, turnover, and return on investment (ROI) for last year.(Round your answers to 2 decimal places.)
2. The board of directors of Joel de Paris, Inc., has set a minimum required rate of return of 19%. What was the company's residual income last year?
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