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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.
Reply
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