Financial Data for Windsor, Inc The Company Paid Dividends of $104,000 Last Year

question 12

Essay

Financial data for Windsor, Inc. for last year appear below:
$$\begin{array} {c}\text {Windsor, Inc.}\\\text {Income Statement}\\\begin{array} { l r r } \text { Sales } & \$ 1,750,000 \\\text { Less operating expenses } & 1,470,000\\\text { Net operating income } & 280,000\\ \text { Less interest and taxes: } & & \\\text { Interest expense } & \$ 96,000 \\\text { Tax expense } & 70,000 & 166,000 \\\text { Net income } & &\$ 114,000 \\\end{array}\end{array}$$
The company paid dividends of $104,000 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 25%. What was the company's residual income last year?

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