Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago $ 31,900 $ 34,700 $ 37,200 88,600 62,500 53,300 43,574 82,700 56,500 11, 1558, 7593, 342 394,771 241, 341 159, 658 $570,000 $430,000 $ 310,000 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $144,769 $ 72,670 $ 41,738 106,088 99,889 67, 140 162,500 162,500 162,500 156, 643 94, 941 38,622 $570,000 $430,000 $ 310,000 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 Yr $741,000 $452, 010 229,710 12,597 9,633 1 Yr Ago $ 511,700 $332,605 129,460 11,769 7,676 481,510 $ 30,190 $ 1.86 703,950 $ 37,050 $ 2.28 Additional information about the company follows. Common stock market price, December 31, Current Year $29.00 Common stock market price, December 31, 1 Year Ago 27.00 Annual cash dividends per share in Current Year 0.32 Annual cash dividends per share 1 Year Ago 0.16 For both the Current Year and 1 Year Ago, compute the following ratios: 1. Return on common stockholders' equity. 2. Price-earnings ratio on December 31. 2a. Assuming Simon's competitor has a price-earnings ratio of 8, which company has higher market expectations for future growth? 3. Dividend yield. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 Compute the return on common stockholders' equity for each year. Return On Common Stockholders' Equity Choose Numerator: 1 Choose Denominator: Return On Common Stockholders' Equity Return on common stockholders' equity Current Year: 1 Year Ago: Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.) Price-Earnings Ratio 7 Choose Denominator: Choose Numerator: = Price-Earnings Ratio = Price-earnings ratio Current Year: 1 Year Ago: 1 = Required 1 Required 2a > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 Assuming Simon's competitor has a price-earnings ratio of 8, which company has higher market expectations for future growth? Which company has higher market expectations for future growth? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 Compute the dividend yield for each year. (Round your answers to 2 decimal places.) Dividend Yield 1 Choose Denominator: Choose Numerator: = = Dividend Yield Dividend yield 1 Current Year: 1 Year Ago Required 2a Required 3 >
