Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 28,479	$ 33,625	$ 34,326
Accounts receivable, net	83,373	58,844	45,768
Merchandise inventory	105,875	80,091	49,737
Prepaid expenses	9,449	8,827	4,009
Plant assets, net	260,388	238,927	219,960
Total assets	$ 487,564	$ 420,314	$ 353,800
Liabilities and Equity
Accounts payable	$ 123,832	$ 69,612	$ 46,702
Long-term notes payable	88,912	98,606	78,972
Common stock, $10 par value	163,500	162,500	163,500
Retained earnings	111,320	89,596	64,626
Total liabilities and equity	$ 487,564	$ 420,314	$ 353,800

For both the current year and one year ago, compute the following ratios:

The companys income statements for the current year and 1 year ago, follow.

For Year Ended December 31	Current Year		1 Year Ago
Sales		$ 633,833		$ 500,174
Cost of goods sold	$ 386,638		$ 325,113
Other operating expenses	196,488		126,544
Interest expense	10,775		11,504
Income tax expense	8,240		7,503
Total costs and expenses		602,141		470,664
Net income		$ 31,692		$ 29,510
Earnings per share		$ 1.95		$ 1.82

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?

Complete this question by entering your answers in the tabs below.

• Required 1A
• Required 1B
• Required 2
• Required 3A
• Required 3B

Compute profit margin ratio for the current year and one year ago.

Profit Margin Ratio
	Numerator:	/	Denominator:	=	Profit Margin Ratio
	Net income	/	Net sales	=	Profit margin ratio
Current Year:		/	$633,833	=		%
1 Year Ago:		/	$500,174	=		%

• Required 1A