Required information [The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. Current Year 1 Year Ago 2 Years Ago At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity $ 31,991 90,019 109,787 10,202 284,430 $ 526,429 $ 37,395 64,170 83, 117 9,625 259,511 $ 453,818 $ 38,586 49,920 55,346 4,160 237,888 $ 385,900 $ 127, 148 98,969 163,500 136,812 $ 526,429 $ 78, 229 103, 334 162,500 109,755 $ 453,818 $ 51, 448 85, 284 162,500 86,668 $ 385,900 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 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Year $ 684,358 $ 417,458 212,151 11,634 8,897 650, 140 $ 34,218 $ 2.11 1 Year Ago $ 540,043 $ 351,028 136, 631 12,421 8,101 508,181 $ 31,862 $ 1.96 For both the Current Year and 1 Year Ago, compute the following ratios: (1-a) Profit margin ratio. (1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago? (2) Total asset turnover. (3-a) Return on total assets. (3-b) Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago? Required 1A Required 1B Required 2 Required 3A Required 3B Compute profit margin ratio for the current year and one year ago. Numerator: Profit Margin Ratio 1 Denominator: 1 = Profit Margin Ratio Profit margin ratio II / Current Year: 1 Year Ago: = = / % Required 1A Required 1B Required 2 Required 3A Required 3B Did profit margin improve or worsen in the Current Year versus 1 Year Ago? Profit margin Required 1A Required 1B Required 2 Required 3A Required 3B Required 2 Compute total asset turnover for the current year and one year ago. Total Asset Turnover 1 Denominator: Numerator: II = Total Asset Turnover Total asset turnover times II Current Year: 1 Year Ago: 11 times Required 1A Required 1B Required 2 Required 3A Required 3B Compute return on total assets for the current year and one year ago. Return On Total Assets 1 Denominator: Numerator: Return On Total Assets Return on total assets = Current Year: 1 Year Ago: Required 1A Required 1B Required 2 Required 3A Required 3B Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago? Return on total assets
