Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Required information Skip to question [The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow. At December 31 Current Year
Required information
Skip to question
[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.
At December 31 | Current Year | 1 Year Ago | 2 Years Ago |
---|---|---|---|
Assets | |||
Cash | $ 30,400 | $ 36,250 | $ 38,400 |
Accounts receivable, net | 86,500 | 62,000 | 50,500 |
Merchandise inventory | 112,000 | 82,200 | 53,000 |
Prepaid expenses | 10,550 | 9,350 | 4,300 |
Plant assets, net | 281,000 | 250,500 | 229,000 |
Total assets | $ 520,450 | $ 440,300 | $ 375,200 |
Liabilities and Equity | |||
Accounts payable | $ 129,200 | $ 72,750 | $ 50,400 |
Long-term notes payable | 96,000 | 101,250 | 80,000 |
Common stock, $10 par value | 160,500 | 160,500 | 160,500 |
Retained earnings | 134,750 | 105,800 | 84,300 |
Total liabilities and equity | $ 520,450 | $ 440,300 | $ 375,200 |
The companys income statements for the Current Year and 1 Year Ago, follow.
For Year Ended December 31 | Current Year | 1 Year Ago | ||
---|---|---|---|---|
Sales | $ 725,000 | $ 540,000 | ||
Cost of goods sold | $ 435,000 | $ 340,200 | ||
Other operating expenses | 224,750 | 129,600 | ||
Interest expense | 11,400 | 13,000 | ||
Income tax expense | 9,450 | 8,900 | ||
Total costs and expenses | 680,600 | 491,700 | ||
Net income | $ 44,400 | $ 48,300 | ||
Earnings per share | $ 2.77 | $ 3.01 |
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?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started