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HomeAccountingFinancialdataforBridger,Inc.,forlastyearareasfollows:
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FinancialdataforBridger,Inc.,forlastyearareasfollows:
yousafraees
PostedonAug12,2014inAccounting|1comment
andreturnComputethecompanysmarginResidualincomeReturnonInvestment(ROI)andResidual
Incometurnover
FinancialdataforBridger,Inc.,forlastyearareasfollows:
Problem1118ReturnonInvestment(ROI)andResidualIncome[LO1,LO2]
FinancialdataforBridger,Inc.,forlastyearareasfollows:
Bridger,Inc.
BalanceSheet
Beginning
Balance
Ending
Balance
Assets
Cash
125,000 $ 130,000
Accountsreceivable
Inventory
Plantandequipment,net
InvestmentinBrierCompany
Land(undeveloped)
340,000
570,000
845,000
400,000
250,000
Totalassets
480,000
490,000
820,000
430,000
250,000
$ 2,530,000 $ 2,600,000
LiabilitiesandStockholdersEquity
Accountspayable
$ 380,000 $ 340,000
Longtermdebt
1,000,000 1,000,000
Stockholdersequity
1,150,000 1,260,000
Totalliabilitiesandstockholders
equity
$ 2,530,000 $ 2,600,000
Bridger,Inc.
IncomeStatement
Sales
Operatingexpenses
Netoperatingincome
Interestandtaxes:
Interestexpense
Taxexpense
Netincome
$ 4,180,000
3,553,000
627,000
$120,000
200,000
320,000
$
307,000
Thecompanypaiddividendsof$197,000lastyear.TheInvestmentinBrierCompanyonthe
balancesheetrepresentsaninvestmentinthestockofanothercompany.
Required:
1. Computethecompanysmargin,turnover,andreturnoninvestment(ROI)forlast
year.(RoundtheTurnoverto2decimalplaces.Omitthe%signinyourresponse.)
Margin
Turnover
15
2.20
ROI
33
2. TheboardofdirectorsofBridger,Inc.,hassetaminimumrequiredreturnof20%.Whatwas
thecompanysresidualincomelastyear?(Omitthe$signinyourresponse.)
Residualincome
247,000
Explanation:1.
Operatingassetsdonotincludeinvestmentsinothercompaniesorinundevelopedland.
Cash
Accountsreceivable
Inventory
Plantandequipment(net)
Ending
Beginning
Balances
Balances
$ 130,000 $ 125,000
480,000
340,000
490,000
570,000
820,000
845,000
Totaloperatingassets
$ 1,920,000
$ 1,880,000
Averageoperatingassets =
$1,880,000+
$1,920,000
2
= $1,900,000
Margin =
Netoperatingincome
Sales
$627,000
$4,180,000
Turnover =
Sales
Averageoperating
assets
15%
$4,180,000
$1,900,000
2.20
ROI = MarginTurnover
= 15%2.2=33%
2.
Netoperatingincome
$ 627,000
Minimumrequiredreturn(20%$1,900,000) 380,000
Residualincome
$ 247,000
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CommunityAnswers
1.
82614
missusasays:
ROI=Netoperatingincome/Averageoperatingassets.Iwillgetthesameanswerinitornot.
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