Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 13-11 Profitability analysis LO P3 Simon Companys year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 31,000 $ 34,200 $

Exercise 13-11 Profitability analysis LO P3

Simon Companys year-end balance sheets follow.

At December 31 2017 2016 2015
Assets
Cash $ 31,000 $ 34,200 $ 37,500
Accounts receivable, net 89,100 62,700 51,600
Merchandise inventory 42,392 83,300 59,500
Prepaid expenses 11,004 9,960 4,192
Plant assets, net

411,504

274,840 217,208
Total assets $ 585,000 $ 465,000 $ 370,000
Liabilities and Equity
Accounts payable $ 148,578 $ 76,227 $ 48,352
Long-term notes payable secured by mortgages on plant assets 108,880 105,880 83,405
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 165,042 120,393 75,743
Total liabilities and equity $ 585,000 $ 465,000 $ 370,000

The companys income statements for the years ended December 31, 2017 and 2016, follow.

For Year Ended December 31 2017 2016
Sales $ 760,500 $ 553,350
Cost of goods sold $ 463,905 $ 359,678
Other operating expenses 235,755 139,998
Interest expense 12,929 12,727
Income taxes 9,887 8,300
Total costs and expenses 722,476 520,703
Net income $ 38,024 $ 32,647
Earnings per share $ 2.34 $ 2.01

Additional information about the company follows.

Common stock market price, December 31, 2017 $ 33.00
Common stock market price, December 31, 2016 31.00
Annual cash dividends per share in 2017 0.32
Annual cash dividends per share in 2016 0.16

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.

Require 1

Return On Common Stockholders Equity
Choose Numerator: / Choose Denominator: = Return On Common Stockholders Equity
/ = Return on common stockholders equity
2017 / = %
2016 / = %
  • Required 2

Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.)

Price-Earnings Ratio
Choose Numerator: / Choose Denominator: = Price-Earnings Ratio
/ = Price-earnings ratio
2017 / =
2016 / =

Require 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
2017 / = %
2016 / = %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Strategic Business Management From Planning To Performance

Authors: Gary Cokins

1st Edition

1937352358, 978-1937352356

More Books

Students also viewed these Accounting questions

Question

=+What is the big message you want them to know?

Answered: 1 week ago

Question

=+What do they (audience members) currently think?

Answered: 1 week ago