3. Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 28,457	$ 31,972	$ 32,967
Accounts receivable, net	78,473	57,081	44,854
Merchandise inventory	99,671	76,175	48,252
Prepaid expenses	9,075	8,647	3,813
Plant assets, net	252,595	229,807	209,914
Total assets	$ 468,271	$ 403,682	$ 339,800
Liabilities and Equity
Accounts payable	$ 113,101	$ 66,176	$ 43,957
Long-term notes payable	85,394	93,775	72,843
Common stock, $10 par value	163,500	163,500	163,500
Retained earnings	106,276	80,231	59,500
Total liabilities and equity	$ 468,271	$ 403,682	$ 339,800

For both the current year and one year ago, compute the following ratios:

The companys income statements for the current year and 1 year ago, follow.

For Year Ended December 31	Current Year		1 Year Ago
Sales		$ 608,752		$ 480,382
Cost of goods sold	$ 371,339		$ 312,248
Other operating expenses	188,713		121,537
Interest expense	10,349		11,049
Income tax expense	7,914		7,206
Total costs and expenses		578,315		452,040
Net income		$ 30,437		$ 28,342
Earnings per share		$ 1.87		$ 1.74

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

(1-a) Profit margin ratio. (1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago?

(2) Total asset turnover.

(3-a) Return on total assets. (3-b) Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago?

(1A)

Compute profit margin ratio for the current year and one year ago.

Profit Margin Ratio
	Numerator:	/	Denominator:	=	Profit Margin Ratio
		/		=	Profit margin ratio
Current Year:		/		=		%
1 Year Ago:		/		=		%

(1B)

Did profit margin improve or worsen in the Current Year versus 1 Year Ago?

Profit margin

(2)

Compute total asset turnover for the current year and one year ago.

Total Asset Turnover
	Numerator:	/	Denominator:	=	Total Asset Turnover
		/		=	Total asset turnover
Current Year:		/		=		times
1 Year Ago:		/		=		times

(3A)

Compute return on total assets for the current year and one year ago.

Return On Total Assets
	Numerator:	/	Denominator:	=	Return On Total Assets
		/		=	Return on total assets
Current Year:		/		=		%
1 Year Ago:		/		=		%

(3B)

Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago?

Return on total assets