Question
Exercise 13-12 (Static) Analyzing profitability LO P3 Simon Companys year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets
Exercise 13-12 (Static) Analyzing profitability LO P3
Simon Companys year-end balance sheets follow.
| At December 31 | Current Yr | 1 Yr Ago | 2 Yrs Ago | ||||||
| Assets | |||||||||
| Cash | $ | 31,800 | $ | 35,625 | $ | 37,800 | |||
| Accounts receivable, net | 89,500 | 62,500 | 50,200 | ||||||
| Merchandise inventory | 112,500 | 82,500 | 54,000 | ||||||
| Prepaid expenses | 10,700 | 9,375 | 5,000 | ||||||
| Plant assets, net | 278,500 | 255,000 | 230,500 | ||||||
| Total assets | $ | 523,000 | $ | 445,000 | $ | 377,500 | |||
| Liabilities and Equity | |||||||||
| Accounts payable | $ | 129,900 | $ | 75,250 | $ | 51,250 | |||
| Long-term notes payable | 98,500 | 101,500 | 83,500 | ||||||
| Common stock, $10 par value | 163,500 | 163,500 | 163,500 | ||||||
| Retained earnings | 131,100 | 104,750 | 79,250 | ||||||
| Total liabilities and equity | $ | 523,000 | $ | 445,000 | $ | 377,500 | |||
The companys income statements for the current year and 1 year ago, follow.
| For Year Ended December 31 | Current Yr | 1 Yr Ago | ||||||||||
| Sales | $ | 673,500 | $ | 532,000 | ||||||||
| Cost of goods sold | $ | 411,225 | $ | 345,500 | ||||||||
| Other operating expenses | 209,550 | 134,980 | ||||||||||
| Interest expense | 12,100 | 13,300 | ||||||||||
| Income tax expense | 9,525 | 8,845 | ||||||||||
| Total costs and expenses | 642,400 | 502,625 | ||||||||||
| Net income | $ | 31,100 | $ | 29,375 | ||||||||
| Earnings per share | $ | 1.90 | $ | 1.80 | ||||||||
Additional information about the company follows.
| Common stock market price, December 31, Current Year | $ | 30.00 |
| Common stock market price, December 31, 1 Year Ago | 28.00 | |
| Annual cash dividends per share in Current Year | 0.29 | |
| Annual cash dividends per share 1 Year Ago | 0.24 | |
For both the current year and one year ago, compute the following ratios: 1. Return on common stockholders' equity.
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2. Dividend yield.
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3. Price-earnings ratio on December 31.
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3a. Assuming Simon's competitor has a price-earnings ratio of 10, which company has higher market expectations for future growth?
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CPA Excel Auditing And Attestation
Authors: Robert A. Prentice
1st Edition
0977165876, 978-0977165872
