Financial data for Windsor, Inc. for last year appear below:
| Windsor, Inc. Statements of Financial Position |
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| Beginning Balance |
Ending Balance |
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| Assets: | ||||
| Cash | $ | 252,000 | $ | 197,853 |
| Accounts receivable | 165,000 | 189,000 | ||
| Inventory | 298,000 | 236,000 | ||
| Plant and equipment (net) | 470,000 | 445,000 | ||
| Investment in Pine Company | 287,000 | 311,000 | ||
| Land (undeveloped) | 410,000 | 410,000 | ||
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| Total assets | $ | 1,882,000 | $ | 1,788,853 |
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| Liabilities and owners%u2019 equity: | ||||
| Accounts payable | $ | 227,000 | $ | 149,000 |
| Long term debt | 860,000 | 860,000 | ||
| Owners%u2019 equity | 795,000 | 779,853 | ||
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| Total liabilities and owners%u2019 equity | $ | 1,882,000 | $ | 1,788,853 |
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| Windsor, Inc. Income statement |
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| Sales | $ | 2,270,000 | ||
| Less operating expenses | 1,884,100 | |||
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| Net operating income | 385,900 | |||
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Less interest and taxes: |
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| Interest expense | $ | 104,700 | ||
| Tax expense | 127,347 | 232,047 | ||
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| Net income | $ | 153,853 | ||
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The company paid dividends of $169,000 last year. The “Investment in Pine Company” on the statement of financial position represents an investment in the stock of another company. |
| Required: | |
| a. |
Compute the company’s margin, turnover, and return on investment for last year. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “%” sign in your response.) |
| Margin | % |
| Turnover | |
| Return on investment | % |
| b. |
The Board of Directors of Windsor, Inc. has set a minimum required return of 30%. What was the company’s residual income last year? (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.) |
| Residual income | $ |