Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Current Year 1 Year Ago 2 Years Ago $ 31,800 89,500 112,500 10,700 278,500 $ 523,000 98,500 163,500 131,100 $ 129,900 Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity $ 523,000 $ 35,625 62,500 82,500 9,375 255,000 $ 445,000 $ 75,250 101,500 163,500 104,750 $ 445,000 For both the current year and one year ago, compute the following ratios: $ 37,800 50,200 54,000 5,000 230,500 $ 377,500 $ 51,250 83,500 163,500 79,250 $ 377,500 Exercise 13-9 (Static) Analyzing risk and capital structure LO P3 The company's income statements for the current year and one year ago, follow. Exercise 13-9 (Static) Analyzing risk and capital structure LO P3 The company's income statements for the current year and one 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 $ 411,225 209,550 $ 673,500 12,100 9,525 $ 31,100 642,400 $ 1.90 1 Year Ago $ 345,500 134,980 13,300 8,845 $532,000 502,625 $ 29,375 $ 1.80 (1) Debt and equity ratios. (2-a) Compute debt-to-equity ratio for the current year and one year ago. (2-b) Based on debt-to-equity ratio, does the company have more or less debt in the current year versus one year ago? (3-a) Times interest earned (3-b) Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago? Exercise 13-10 (Static) Analyzing efficiency and profitability 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 $ 411,225 209,550 12,100 9,525 $ 673,500 642,400 $ 31,100 $ 1.90 1 Year Ago $ 345,500 134,980 13,300 8,845 $ 532,000 502,625 $ 29,375 $1.80 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? Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share $ 411,225 209,550 12,100 9,525 $ 673,500 642,400 $ 31,100 $ 1.90 $ 345,500 134,980 13,300 8,845 $ 532,000 502,625 $ 29,375 $ 1.80 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 0.291 0.24 For both the current year and one year ago, compute the following ratios: 1. Return on equity. 2. Dividend yield. 3a. Price-earnings ratio on December 31. 3b. Assuming Simon's competitor has a price-earnings ratio of 10, which company has higher market expectations for future growth