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. 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 $ 34,581 101,218 121,024 10,805 312,685 $ 580,313 $ 40, 422 70,738 90,699 10,506 287,905 $ 500,270 $ 42,957 57, 276 60,407 4,726 260,034 $ 425,400 $ 144,498 108,008 163,500 164, 307 $ 580,313 $ 86,237 113,911 163,500 136,622 $ 500,270 $ 57,837 93,073 162,500 111,990 $ 425,400 Exercise 17-11 (Algo) Analyzing profitability LO P3 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 $ 754,407 $ 460,188 233,866 12,825 9,807 716,686 $ 37,721 1 Year Ago $ 595,321 $ 386,959 150,616 13,692 8,930 560,197 $ 35,124 $ 2.32 $ 2.16 Additional information about the company follows. Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago $ 30.00 28.00 0.36 0.18 For both the current year and one year ago, compute the following ratios: 1. Return on common stockholders' equity. 2. Dividend yield. 3a. Price-earnings ratio on December 31. 3b. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth? Required 1 Required 2 Required 3A Required 3B Compute the return on common stockholders' equity for each year. Return On Common Stockholders' Equity Numerator: 1 Denominator: Return On Common Stockholders' Equity Return on common stockholders' equity Preferred dividends 1 = % Current Year: 1 Year Ago: 1 1 % Required 1 Required 2 Required 3A Required 3B Compute the dividend yield for each year. (Round your answers to 2 decimal places.) Numerator: Dividend Yield 1 1 Denominator: = Dividend Yield Dividend yield % 1 Current Year: 1 Year Ago 1 = % Required 1 Required 2 Required 3A Required 3B Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.) Price-Earnings Ratio Numerator: 1 Denominator: = Price-Earnings Ratio Price-earnings ratio / = Current Year: 1 Year Ago: 1 Required 1 Required 2 Required 3A Required 3B Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth? Which company has higher market expectations for future growth
