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Exercise 13-11 Profitability analysis LO P3 Simon Companys year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 31,200 $ 34,000 $
Exercise 13-11 Profitability analysis LO P3
Simon Companys year-end balance sheets follow.
At December 31 | 2017 | 2016 | 2015 | ||||||
Assets | |||||||||
Cash | $ | 31,200 | $ | 34,000 | $ | 36,300 | |||
Accounts receivable, net | 89,800 | 62,100 | 58,800 | ||||||
Merchandise inventory | 88,271 | 84,200 | 51,400 | ||||||
Prepaid expenses | 10,746 | 10,491 | 4,247 | ||||||
Plant assets, net | 339,983 | 294,209 | 239,253 | ||||||
Total assets | $ | 560,000 | $ | 485,000 | $ | 390,000 | |||
Liabilities and Equity | |||||||||
Accounts payable | $ | 136,651 | $ | 80,326 | $ | 50,450 | |||
Long-term notes payable secured by mortgages on plant assets | 102,122 | 110,434 | 83,604 | ||||||
Common stock, $10 par value | 162,500 | 162,500 | 162,500 | ||||||
Retained earnings | 158,727 | 131,740 | 93,446 | ||||||
Total liabilities and equity | $ | 560,000 | $ | 485,000 | $ | 390,000 | |||
The companys income statements for the years ended December 31, 2017 and 2016, follow.
For Year Ended December 31 | 2017 | 2016 | ||||||||||
Sales | $ | 728,000 | $ | 577,150 | ||||||||
Cost of goods sold | $ | 444,080 | $ | 375,148 | ||||||||
Other operating expenses | 225,680 | 146,019 | ||||||||||
Interest expense | 12,376 | 13,274 | ||||||||||
Income taxes | 9,464 | 8,657 | ||||||||||
Total costs and expenses | 691,600 | 543,098 | ||||||||||
Net income | $ | 36,400 | $ | 34,052 | ||||||||
Earnings per share | $ | 2.24 | $ | 2.10 | ||||||||
Additional information about the company follows.
Common stock market price, December 31, 2017 | $ | 29.00 |
Common stock market price, December 31, 2016 | 27.00 | |
Annual cash dividends per share in 2017 | 0.34 | |
Annual cash dividends per share in 2016 | 0.17 | |
To help evaluate the company's profitability, compute the following ratios for 2017 and 2016: 1. Return on common stockholders' equity. 2. Price-earnings ratio on December 31. 3. Dividend yield.
Compute the return on common stockholders' equity for each year.
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