Exercise 13-11 Analyzing profitability LO P3 Simon Company's year-end balance sheets follow. Current nt 1 Yr Ago 2 Yrs Ago Yr 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 $ 31,300 $ 34,600 $ 37,400 88,100 63,500 51,300 66,145 82,500 57,500 11,418 9,673 3,234 398,037 279,727 150,566 $595,000 $470,000 $300,000 $149,637 $ 79,430 $ 39,996 111,860 105,938 64,974 162,500 162,500 162,500 171,003 122,132 32,530 $595,000 $470,000 $300,000 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 $773,500 $471,835 239,785 13,150 10,056 734,826 $ 38,674 1 Yr Ago $ 559,300 $363,545 141,503 12,864 8,390 526,302 $ 32,998 Earnings per share $ 2.38 $ 2.03 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 $ 30.00 28.00 0.34 0.17 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: 1 Choose Denominator: Return On Common Stockholders' Equity Return on common stockholders' equity Current Year: 1 Year Ago: Required 1 Required 2 > 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 | Choose Denominator: Choose Numerator: = Price-Earnings Ratio Price-earnings ratio Current Year: 1 Year Ago: 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? 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 I Choose Denominator: Choose Numerator: Dividend Yield Dividend yield Current Year: 1 Year Ago Required 2a Required 3 >
