Question
Exercise 13-10 Analyzing efficiency and profitability LO P3 [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. At December
Exercise 13-10 Analyzing efficiency and profitability LO P3
[The following information applies to the questions displayed below.]
Simon Company's year-end balance sheets follow.
At December 31Current Yr1 Yr Ago2 Yrs AgoAssetsCash$31,400$36,250$37,600Accounts receivable, net86,60063,50049,500Merchandise inventory110,50081,60054,000Prepaid expenses10,4009,3504,000Plant assets, net276,000
248,500227,000Total assets$514,900$439,200$372,100Liabilities and EquityAccounts payable$128,000$74,250$51,400Long-term notes payable secured by
mortgages on plant assets97,50099,25083,800Common stock, $10 par value162,000162,000162,000Retained earnings127,400103,70074,900Total liabilities and equity$514,900$439,200$372,100
The company's income statements for the Current Year and 1 Year Ago, follow.
For Year Ended December 31Current Yr1 Yr AgoSales$775,000$600,000Cost of goods sold$480,500$372,000Other operating expenses248,000138,000Interest expense11,30013,300Income tax expense9,5508,775Total costs and expenses749,350532,075Net income$25,650$67,925Earnings per share$1.58$4.19
For both the Current Year and 1 Year Ago, compute the following ratios:
(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?
For both the Current Year and 1 Year Ago, compute the following ratios:
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