Exercise 13-11 Analyzing profitability LO P3 Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 31,700 $ 34,300 $ 37,100 88,600 63,900 58,800 37,238 84,400 58,100 11, 742 10,500 4,305 430, 720 306,900 221,695 $600,000 $500,000 $380,000 $150,894 $ 85,345 $ 51,163 112,800 111,550 81,461 162,500 162,500 162,500 173,806 140, 605 84,876 $600,000 $500,000 $380,000 The company's income statements for the Current Year and 1 Year Ago, follow. For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Current Yr $ 780,000 $475,800 241,800 13,260 10,140 741,000 $ 39,000 1 Yr Ago $ 595,000 $386,750 150,535 13,685 8.925 559,895 $ 35, 105 The company's income statements for the Current Year and 1 Year Ago, follow. For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Yr $ 780,000 $ 475,800 241,800 13,260 10,140 741,000 $ 39,000 $ 2.40 1 Yr Ago $ 595,000 $386, 750 150,535 13,685 8,925 559,895 $ 35, 105 $ 2.16 35 Additional information about the company follows. cos $32.00 Common stock market price, December 31, Current Year Corrmon stock market price, December 31, 1 Year ago Annual cash dividends por share in Current Year Annual cash dividends per share 1 Year Ago 30.00 0.36 0.19 For both the Current Year and 1 Year Ago, compute the following ratios: 1. Return on common stockholders' equity. 2. Price-earnings ratio on December 31. 2a. Assuming Simon's competitor has a price earnings ratio of 7, which company has higher market expectations for fu 3. Dividend yield 1. Return on common stockholders' equity. 2. Price-earnings ratio on December 31 2a. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth 3. Dividend yield. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 Compute the return on common stockholders equity for each year Return On Common Stockholders Equity Choose Numerator Choose Denominatori Not Income Preferred dividends Average common stockholders equity Return On Common Stockholders' Equity Return on common stockholders' equity 09 S Current Year: 1 Year Ago: 39,000 35,105 Required 2 > 1. Return on common stockholders' equity. 2. Price-earnings ratio on December 31 20. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth? 3. Dividend yield Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 Compute the price-earnings ratio for each year. (Round your antiwers to 2 decimal places.) Price:Earnings Ratio Choose Numerator Choose Denominator: Market price per common share Earnings per share S 32.00 $ 30.00 Price-Earnings Ratio Price-earrings ratio 0 Current Year: 1 Year Ago: 0
