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 $ 34,700 $ 37,500 89,100 62,300 59,000 61,501 83,700 53,300 10,613 9,345 3,666 377,086 254,955 176,534 $570,000 $445,000 $330,000 $137,672 $ 74,453 $ 43,996 105,017 104,397 74,389 162,500 162,500 162,500 164,811 103,650 49,115 $570,000 $445,000 $330,000 The company's income statements for the Current Year and 1 Year Ago, follow. For Year Ended December 31 Current Yr 1 Yr Ago Sales $ 741,000 $529,550 Cost of goods sold $ 452,010 $ 344,208 Other operating expenses 229, 710 133,976 Interest expense 12,597 12,180 Income tax expense 9,633 7,943 Total costs and expenses 703,950 498,307 Net income $ 37,050 $ 31,243 Earnings per share $ 2.28 $ 1.92 Additional information about the company follows. $28.00 Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago 26.00 0.30 0.15 For both the Current Year and 1 Year Ano compute the following ratios 9,633 7,943 Income tax expense Total costs and expenses Net income 703,950 $ 37,050 498,307 $ 31,243 Earnings per share $ 2.28 $ 1.92 Additional information about the company follows. $28.00 Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago 26.00 0.30 0.15 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 6, 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 Denominator: Net income Preferred dividends Return On Common Stockholders' Equity Return on common stockholders' equity 0 % Average common stockholders' equity / Current Year: $ 37,050 1 1 Year Ago: / 0 % 9,633 7,943 Income tax expense Total costs and expenses Net income 703,950 $ 37,050 498,307 $ 31,243 Earnings per share $ 2.28 $ 1.92 Additional information about the company follows. $28.00 Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago 26.00 0.30 0.15 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 6, 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 answers to 2 decimal places.) Price-Earnings Ratio 1 Choose Denominator: Choose Numerator: Price-Earnings Ratio Price-earnings ratio / Current Year: / 11 0 1 Year Ago: / 0 11 cico capisc Income tax expense Total costs and expenses 11511 9,633 12, IUU 7,943 703,950 $ 37,050 498,307 $ 31,243 Net income Earnings per share $ 2.28 $ 1.92 Additional information about the company follows. $28.00 Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago 26.00 0.30 0.15 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 6, 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 Assuming Simon's competitor has a price-earnings ratio of 6, which company has higher market expectations for future growth? Which company has higher market expectations for future growth? 9,633 7,943 Income tax expense Total costs and expenses Net income 703,950 $ 37,050 498,307 $ 31,243 Earnings per share $ 2.28 $ 1.92 Additional information about the company follows. $28.00 Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago 26.00 0.30 0.15 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 6, 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 dividend yield for each year. (Round your answers to 2 decimal places.) Dividend Yield Choose Numerator: | Choose Denominator: Dividend Yield / = Dividend yield Current Year: / 0% 1 Year Ago / II 0 %
