15

Simon Companys year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 30,200	$ 36,000	$ 37,800
Accounts receivable, net	86,900	62,500	50,000
Merchandise inventory	111,500	82,600	53,500
Prepaid expenses	10,950	9,350	5,200
Plant assets, net	279,000	248,000	225,000
Total assets	$ 518,550	$ 438,450	$ 371,500
Liabilities and Equity
Accounts payable	$ 129,200	$ 74,250	$ 50,400
Long-term notes payable	96,500	101,500	80,600
Common stock, $10 par value	164,000	164,000	164,000
Retained earnings	128,850	98,700	76,500
Total liabilities and equity	$ 518,550	$ 438,450	$ 371,500

The companys income statements for the Current Year and 1 Year Ago, follow.

For Year Ended December 31	Current Year		1 Year Ago
Sales		$ 755,000		$ 540,000
Cost of goods sold	$ 468,100		$ 340,200
Other operating expenses	234,050		124,200
Interest expense	12,200		13,400
Income tax expense	9,500		8,675
Total costs and expenses		723,850		486,475
Net income		$ 31,150		$ 53,525
Earnings per share		$ 1.90		$ 3.26

For both the Current Year and 1 Year Ago, compute the following ratios:

(3-a) Compute return on total assets for the current year and one year ago. (3-b) Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago?