Determine whether current year net income has improved the operating performance or not.

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Chapter 14, Problem 3DQ

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Determine whether current year net income has improved the operating performance or not.

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A company’s current year net income (after income tax) is 25% larger than that of the preceding year. Does this indicate improved operating performance? Why or why not?

PROBLEM 11-17 Return on Investment (ROI) and Residual Income LO11-1, LO11-2 Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets Cash $ 140,000 $ 120,000 Accounts receivable 450,000 530,000 Inventory 320,000 380,000 Plant and equipment, net 680,000 620,000 Investment in Buisson, S.A. 280,000 170,000 250,000 Land (undeveloped) 180,000 Total assets $2,020,000 $2,100,000 Liabilities and Stockholders' Equity Accounts payable. $ 360,000 $ 310,000 Long-term debt Stockholders' equity 1,500,000 1,500,000 160,000 290,000 Total liabilities and stockholders' equity $2,020,000 $2,100,000 Joel de Paris, Inc. Income Statement Sales $4,050,000 Operating expenses Net operating income 3,645,000 405,000 Interest and taxes: Interest expense $150,000 Таx expense 110,000 260,000 Net income $ 145,000 The company paid dividends of $15,000 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an…

Which of the following statements is likely to be true, for a company making profits? Select one: a. Retained profits at the year-end will be greater than shareholders' equity. b. The profit for the year will be greater than the gross profit. c. Retained profits at the year-end will be greater than retained profits at the beginning of the year. d. The operating profit will be less than the profit for the year.