Required information

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 $ $31,600$ $ $36,250$ $ $37,600$

Accounts receivable, net $87,20061,50051,000$

Merchandise inventory $111,50083,80052,500$

Prepaid expenses $10,5009,2004,900$

Plant assets, net $282,000255,500227,000$

Total assets $ $522,800$ $ $446,250$ $ $373,000$

Liabilities and Equity

Accounts payable $ $128,800$ $ $72,250$ $ $50,600$

Long$-$term notes payable $98,00098,50082,000$

Common stock, $$10$ par value $162,000162,000162,000$

Retained earnings $134,000113,50078,400$

Total liabilities and equity $ $522,800$ $ $446,250$ $ $373,000$

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 $ $725,000$ $ $640,000$

Cost of goods sold $ $442,250$ $ $403,200$

Other operating expenses $224,750147,200$

Interest expense $11,40012,500$

Income tax expense $9,3008,600$

Total costs and expenses $687,700571,500$

Net income $ $37,300$ $ $68,500$

Earnings per share $ $2\mathrm{.}30$ $ $4\mathrm{.}23$

For both the Current Year and $1$ Year Ago, compute the following ratios:

$(3-$a$)$ Compute return on total assets for the current year and one year ago.

$(3-$b$)$ Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus $1$ Year Ago?