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 $ 31,900 $ 34,100 $ 36,300 88,400 63,800 54,500 87,168 83,900 57,500 11,305 9,425 3,520 376,227 248,775 168,180 $595,000 $440,000 $ 320,000 $145,192 $ 76,591 $ 43,507 109,623 101,200 69,306 162,500 162,500 162,500 177,685 99,709 44,687 $595,000 $440,000 $ 320,000 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 $773,500 $ 523,600 Cost of goods sold $ 471,835 $340, 340 Other operating expenses 239,785 132,471 Interest expense 13,150 12,043 Income tax expense 10,056 7,854 Total costs and expenses 734,826 492,708 Net income $ 38,674 $ 30,892 Earnings per share $ 2.38 $ 1.90 Additional information about the company follows. 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 $ 32.00 30.00 0.24 0.12 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 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: = Return On Common Stockholders' Equity Return on common stockholders' equity 9d Current Year: 1 Year Ago: 9 Required 1 Required 2 > 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 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: 1 Year Ago: 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 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 7, which company has higher market expectations for future growth? Which company has higher market expectations for future growth? 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 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: 1 Choose Denominator: 1 Current Year: 1 Year Ago Dividend Yield Dividend yield % 1 %