Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago 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 $ 31,600 $ 34,300 $ 37,000 88,100 64,700 50,900 3,479 83,500 57,900 10,534 9,875 3,520 426,287 282,625 170,680 $560,000 $475,000 $320,000 $140,834 $ 78,670 $ 43,085 108,438 112,528 72,134 162,500 162,500 162,500 148, 228 121, 302 42,281 $560,000 $475,000 $320,000 The company's income statements for the Current Year and 1 Year Ago, follow. 1 Yr Ago $ 565, 250 For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Current Yr $728,000 $444,080 225,680 12,376 9,464 691,600 $ 36,400 $367,413 143,008 13,001 8,479 531,901 $ 33, 349 Earnings per share $ 2.24 $ 2.05 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 $32.00 30.00 0.20 0.10 For both the current year and one year ago, compute the following ratios: 1. Return on common stockholders' equity. 2. Dividend yield. 3. Price-earnings ratio on December 31. 3a. Assuming Simon's competitor has a price-earnings ratio of 6, 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 3 Required 3a Compute the return on common stockholders' equity for each year. Return On Common Stockholders' Equity Choose Numerator: 1 Choose Denominator: II Return On Common Stockholders' Equity Return on common stockholders' equity Net income Preferred dividends Average common 1 stockholders' equity 32 / Current Year: $ 36,400 = 0 % 1 Year Ago: $ 33,349 30 / = 0 % Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 3a Compute the dividend yield for each year. (Round your answers to 2 decimal places.) Dividend Yield Choose Numerator: 1 Choose Denominator: = Dividend Yield 1 = Dividend yield Current Year: 1 = 0 % 1 Year Ago 1 01% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 3a Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.) Price-Earnings Ratio Choose Numerator: 1 Choose Denominator: = Price-Earnings Ratio Price-earnings ratio / = Current Year: / = 0 1 Year Ago: 1 = 0 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 3a Assuming Simon's competitor has a price-earnings ratio of 6, which company has higher market expectations for future growth? Which company has higher market expectations for future growth?
