Financial data for Stirling, Inc., for last year are as follows:
Stirling, Inc.
Balance Sheet |
|
Beginning
Balance |
Ending
Balance |
| Assets |
|
|
|
|
| Cash |
$ |
139,000 |
$ |
136,000 |
| Accounts receivable |
|
334,000 |
|
478,000 |
| Inventory |
|
563,000 |
|
478,000 |
| Plant and equipment, net |
|
874,000 |
|
858,000 |
| Investment in Brier Company |
|
405,000 |
|
429,000 |
| Land (undeveloped) |
|
246,000 |
|
250,000 |
|
|
|
|
|
| Total assets |
$ |
2,561,000 |
$ |
2,629,000 |
|
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
|
|
| Accounts payable |
$ |
381,000 |
$ |
339,000 |
| Long-term debt |
|
974,000 |
|
974,000 |
| Stockholders' equity |
|
1,206,000 |
|
1,316,000 |
|
|
|
|
|
| Total liabilities and stockholders' equity |
$ |
2,561,000 |
$ |
2,629,000 |
|
|
|
|
|
|
Stirling, Inc.
Income Statement |
| Sales |
|
$ |
5,404,000 |
| Operating expenses |
|
|
4,755,520 |
|
|
|
|
| Net operating income |
|
|
648,480 |
| Interest and taxes: |
|
|
|
| Interest expense |
$ 130,000 |
|
|
| Tax expense |
192,000 |
|
322,000 |
|
|
|
|
| Net income |
|
$ |
326,480 |
|
|
|
|
|
| The company paid dividends of $216,480 last year. The "Investment in Brier Company" on the balance sheet represents an investment in the stock of another company. |
| Required: |
| 1. |
Compute the company's margin, turnover, and return on investment (ROI) for last year. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) |
| 2. |
The board of directors of Stirling, Inc., has set a minimum required return of 15%. What was the company's residual income last year? |