Exercise 13-12 (Algo) 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 Common stock, $10 par value Retained earnings Total liabilities and equity $ 31,600 $ 34,700 $ 36,400 88,800 63,600 50,400 21,633 82,500 57,000 10,874 10,605 4,111 437,093 308,595 222,089 $590,000 $500,000 $ 370,000 $143,972 $ 82,810 $ 47,863 110,920 116,150 80,135 162,500 162,500 162,500 172,608 138,540 79,502 $590,000 $500,000 $370,000 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 $767,000 $ 595,000 Cost of goods sold $467,870 $386,750 Other operating expenses 237,770 150,535 Interest expense 13,039 13,685 Income tax expense 9,971 8,925 Total costs and expenses 728,650 559,895 Net income $ 38,350 $ 35,105 Earnings per share $ 2.36 $ 2.16 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 $29.00 27.00 0.22 0.11 For both the current year and one year ago, compute the following ratios: 1. Return on common stockholders' equity 2. Dividend yield. 3. Price-earnings ratio on December 31. 3a. Assuming Simon's competitor has a price-earnings ratio of 6, which company has higher market expectations for future growth? Required 1 Required 2 Required 3 Required 3a 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 % 11 11 Current Year: 1 Year Ago: 1 11 % Required 1 Required 2 Required 3 Required 3a = 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 11 Dividend Yield Dividend yield % 11 % Required 1 Required 2 Required 3 Required 3a Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.) Price-Earnings Ratio Choose Numerator: 1 Choose Denominator: = Price-Earnings Ratio / = Price-earnings ratio Current Year: 1 1 Year Ago: 1 11 Required 1 Required 2 Required 3 Required 3a 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