Financial Data for Bingham Company for Last Year Appear Below

question 40

Essay

Financial data for Bingham Company for last year appear below:

Bingham Company
Statements of Financial Position
$\begin{array} { l r r } & \begin{array} { r } \text { Beginning } \\ \text { Balance } \end{array} & \begin{array} { r } \text { Ending } \\ \text { Balance } \end{array} \\ \text { Assets: } & \underline { } & \\ \text { Cash } & \$ 135,000 & \$ 266,000 \\ \text { Accounts receivable } & 225,000 & 475,000 \\ \text { Inventory } & 314,000 & 394,000 \\ \text { Plant and equipment (net) } & 940,000 & 860,000 \\ \text { Investment in Carr Company } & 104,000 & 101,000 \\ \text { Land (undeveloped) } & \underline { 198,000 } & \underline { 65,000 } \\ \text { Total assets } & \$ 1,916,000 & \$ 2,161,000 \\ & & \end{array}$
$\begin{array} { l r r } \text { Liabilities and owners' equity:}\\\text { Accounts payable } & \$ 88,000 & \$ 119,000 \\ \text { Long-term debt } & 585,000 & 665,000 \\ \text { Owners' equity } & 1,243,000 & 1,377,000 \\ \text { Total liabilities } & & \\ \text { and owners' equity } & \$ 1,916,000 & \$ 2,161,000 \\ & & \end{array}$
Bingham Company
Income Statement $\begin{array}{l}\begin{array}{lll}\text { Sales}\\\text { Less operating expenses}\\\text { Net operating income}\\\text { Less interest and taxes:}\\\text { Interest expense}\\\text { Tax expense}\\\text { Operating Income}\\\end{array}\begin{array}{lll}\\ \\\ \$ 90,000 \\129,000\end{array}\begin{array}{lll}\$ 4,644,000 \\4, 291,000 \\353,000 \\\\\\219,000 \\\$ 134,000\end{array}\end{array}$

The "Investment in Carr 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 Beaker Company have set a minimum required return of 15%. What was the company's residual income last year?

---

Definitions:

Direct Expression

A mode of communication where thoughts and feelings are conveyed openly and without subtext.

Environmental

pertains to factors and conditions that surround an organism or system, influencing its development and behavior.

Genetic

Related to genes or heredity, the study of how traits are transmitted from parents to offspring.

Identical Twins

Twins who are genetically identical, resulting from the fertilization of a single egg that split into two.