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Simon Companys year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 31,400 $ 35,750 $ 38,600
Simon Companys year-end balance sheets follow.
At December 31 | Current Yr | 1 Yr Ago | 2 Yrs Ago | ||||||||
Assets | |||||||||||
Cash | $ | 31,400 | $ | 35,750 | $ | 38,600 | |||||
Accounts receivable, net | 87,000 | 62,500 | 51,000 | ||||||||
Merchandise inventory | 112,000 | 83,200 | 54,000 | ||||||||
Prepaid expenses | 10,650 | 9,350 | 4,700 | ||||||||
Plant assets, net | 282,000 | 250,000 | 225,000 | ||||||||
Total assets | $ | 523,050 | $ | 440,800 | $ | 373,300 | |||||
Liabilities and Equity | |||||||||||
Accounts payable | $ | 130,000 | $ | 73,750 | $ | 50,800 | |||||
Long-term notes payable secured by mortgages on plant assets | 97,500 | 99,750 | 82,600 | ||||||||
Common stock, $10 par value | 161,500 | 161,500 | 161,500 | ||||||||
Retained earnings | 134,050 | 105,800 | 78,400 | ||||||||
Total liabilities and equity | $ | 523,050 | $ | 440,800 | $ | 373,300 | |||||
The companys income statements for the Current Year and 1 Year Ago, follow.
For Year Ended December 31 | Current Yr | 1 Yr Ago | ||||||||||
Sales | $ | 725,000 | $ | 570,000 | ||||||||
Cost of goods sold | $ | 427,750 | $ | 353,400 | ||||||||
Other operating expenses | 232,000 | 142,500 | ||||||||||
Interest expense | 11,400 | 12,700 | ||||||||||
Income tax expense | 9,550 | 8,900 | ||||||||||
Total costs and expenses | 680,700 | 517,500 | ||||||||||
Net income | $ | 44,300 | $ | 52,500 | ||||||||
Earnings per share | $ | 2.74 | $ | 3.25 | ||||||||
For both the Current Year and 1 Year Ago, compute the following ratios:
Exercise 13-10 Part 1
(1-a) Profit margin ratio. (1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago?
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