Exercise 17-11 (Algo) Analyzing profitability LO P3

The companys income statements for the Current Year and 1 Year Ago, follow.

For Year Ended December 31	Current Year	1 Year Ago
Sales		$ 659,419		$ 520,363
Cost of goods sold	$ 402,246		$ 338,236
Other operating expenses	204,420		131,652
Interest expense	11,210		11,968
Income tax expense	8,572		7,805
Total costs and expenses		626,448		489,661
Net income		$ 32,971		$ 30,702
Earnings per share		$ 2.03		$ 1.89

Additional information about the company follows.

Common stock market price, December 31, Current Year	$ 33.00
Common stock market price, December 31, 1 Year Ago	31.00
Annual cash dividends per share in Current Year	0.24
Annual cash dividends per share 1 Year Ago	0.12

For both the current year and one year ago, compute the following ratios:

1. Return on equity.

2. Dividend yield.

3a. Price-earnings ratio on December 31.

3b. Assuming Simon's competitor has a price-earnings ratio of 6, which company has higher market expectations for future growth?

Required information

Use the following information for the Exercises below. (Algo)

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[The following information applies to the questions displayed below.]

Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 29,030	$ 34,982	$ 36,436
Accounts receivable, net	89,341	62,444	49,063
Merchandise inventory	107,967	83,324	50,710
Prepaid expenses	9,734	9,091	3,928
Plant assets, net	271,173	247,439	224,263
Total assets	$ 507,245	$ 437,280	$ 364,400
Liabilities and Equity
Accounts payable	$ 122,515	$ 73,900	$ 47,620
Long-term notes payable	93,455	98,563	81,338
Common stock, $10 par value	163,500	163,500	162,500
Retained earnings	127,775	101,317	72,942
Total liabilities and equity	$ 507,245	$ 437,280	$ 364,400

For both the current year and one year ago, compute the following ratios:

Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. For both the current year and one year ago, compute the following ratios: Complete this question by entering your answers in the tabs below. 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? Complete this question by entering your answers in the tabs below. Compute the price-earnings ratio for each year. Note: Round your answers to 2 decimal places. For both the current year and one year ago, compute the following ratios: 1. Return on equity. 2. Dividend yield. 3a. Price-earnings ratio on December 31. 3b. Assuming Simon's competitor has a price-earnings ratio of 6 , which company has higher market expectations for future growth? Complete this question by entering your answers in the tabs below. Compute the return on equity for each year. Complete this question by entering your answers in the tabs below. Compute the dividend yield for each year. Note: Round your answers to 2 decimal places. Exercise 17-11 (Algo) Analyzing profitability LO P3 The company's income statements for the Current Year and 1 Year Ago, follow. Additional information about the company follows. For both the current year and one year ago, compute the following ratios: 1. Return on equity. 2. Dividend yield. 3a. Price-earnings ratio on December 31. 3b. Assuming Simon's competitor has a price-earnings ratio of 6 , which company has higher marl growth