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Compute the companys margin turnover and return on

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Reference no: EM13571941

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.)


  Margin %
  Turnover       
  ROI %

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?
  Residual income $   

Reference no: EM13571941

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