Financial data for Windsor, Inc. for last year appear below:
Windsor, Inc.
Statements of Financial Position
Beginning Ending
Balance Balance
Assets:
Cash $295,000 $336,524
Accounts receivable 178,000 180,000
Inventory 275,000 222,000
Plant and equipment (net) 480,000 441,000
Investment in Pine Company 306,000 322,000
Land (undeveloped) 273,000 273,000
Total assets $1,807,000 $1,774,524
Liabilities and owners’ equity:
Accounts payable $224,000 $197,000
Long-term debt 824,000 824,000
Owners’ equity 759,000 753,524
Total liabilities and owners’ equity $1,807,000 $1,774,524
Windsor, Inc.
Income statement
Sales $2,480,000
Less operating expenses 2,033,600
Net operating income 446,400
Less interest and taxes:
Interest expense $99,100
Tax expense 151,776 250,876
Net income $195,524
The company paid dividends of $201,000 last year. The \"Investment in
Pine Company\" on the statement of financial position represents an
investment in the stock of another company.
Required:
a. Compute the company\'s margin, turnover, and return on investment for last year.
b. The Board of Directors of Windsor, Inc. has set a minimum
required return of 34%. What was the company\'s residual income last
year?
