Required information Complete this question by entering your answers in the tabs below.

Required $3$A

Required $3$B

Compute the return on equity for each year. Complete this question by entering your answers in the tabs below.

Required $2$

Required $3$A

Required $3$B

Compute the dividend yield for each year.

Note: Round your answers to $2$ decimal places. Complete this question by entering your answers in the tabs below.

Required $1$

Required $3$A

Required $3$B

Compute the price$-$earnings ratio for each year.

Note: Round your answers to $2$ decimal places. Complete this question by entering your answers in the tabs below.

Required $2$

Required $3$A

Required $3$B

Assuming Simon's competitor has a price$-$earnings ratio of $8,$ which company has higher market expectations for future

growth?

Which company has higher market expectations for future growth?

Skip to question

$[$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 $ $36,662$ $ $43,703$ $ $42,023$

Accounts receivable, net $104,15275,73758,341$

Merchandise inventory $136,243100,08162,761$

Prepaid expenses $12,04010,9154,910$

Plant assets, net $326,133299,935269,565$

Total assets $ $615,230$ $ $530,371$ $ $437,600$

Liabilities and Equity

Accounts payable $ $151,660$ $ $88,736$ $ $58,341$

Long$-$term notes payable $113,350121,98596,710$

Common stock, $$10$ par value $163,500163,500163,500$

Retained earnings $186,720156,150119,049$

Total liabilities and equity $ $615,230$ $ $530,371$ $ $437,600$

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

The company$$s income statements for the Current Year and $1$ Year Ago, follow.

For Year Ended December $31$ Current Year $1$ Year Ago

Sales $ $799,799$ $ $631,141$

Cost of goods sold $ $487,877$ $ $410,242$

Other operating expenses $247,938159,679$

Interest expense $13,59714,516$

Income tax expense $10,3979,467$

Total costs and expenses $759,809593,904$

Net income $ $39,990$ $ $37,237$

Earnings per share $ $2\mathrm{.}46$ $ $2\mathrm{.}29$

Additional information about the company follows.

Common stock market price, December $31,$ Current Year $ $33\mathrm{.}00$

Common stock market price, December $31,1$ Year Ago $31\mathrm{.}00$

Annual cash dividends per share in Current Year $0\mathrm{.}24$

Annual cash dividends per share $1$ Year Ago $0\mathrm{.}12$

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

$1.$ Return on equity.

$2.$ Dividend yield.

$3$a$.$ Price$-$earnings ratio on December $31.$

$3$b$.$ Assuming Simon's competitor has a price$-$earnings ratio of $8,$ which company has higher market expectations for future growth?