Question
Simon Companys year-end balance sheets follow. At December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash $ 31,400 $ 35,250 $ 37,400
Simon Companys year-end balance sheets follow.
At December 31 | Current Year | 1 Year Ago | 2 Years Ago |
---|---|---|---|
Assets | |||
Cash | $ 31,400 | $ 35,250 | $ 37,400 |
Accounts receivable, net | 87,000 | 63,500 | 51,000 |
Merchandise inventory | 110,500 | 82,800 | 54,000 |
Prepaid expenses | 10,350 | 9,350 | 4,700 |
Plant assets, net | 276,000 | 256,500 | 235,000 |
Total assets | $ 515,250 | $ 447,400 | $ 382,100 |
Liabilities and Equity | |||
Accounts payable | $ 129,600 | $ 75,000 | $ 51,000 |
Long-term notes payable | 98,000 | 99,750 | 81,600 |
Common stock, $10 par value | 162,000 | 162,000 | 162,000 |
Retained earnings | 125,650 | 110,650 | 87,500 |
Total liabilities and equity | $ 515,250 | $ 447,400 | $ 382,100 |
The companys income statements for the Current Year and 1 Year Ago, follow.
For Year Ended December 31 | Current Year | 1 Year Ago | ||
---|---|---|---|---|
Sales | $ 765,000 | $ 550,000 | ||
Cost of goods sold | $ 474,300 | $ 352,000 | ||
Other operating expenses | 237,150 | 132,000 | ||
Interest expense | 12,100 | 13,200 | ||
Income tax expense | 9,400 | 8,775 | ||
Total costs and expenses | 732,950 | 505,975 | ||
Net income | $ 32,050 | $ 44,025 | ||
Earnings per share | $ 1.98 | $ 2.72 |
For both the Current Year and 1 Year Ago, compute the following ratios:
(1-a) Compute profit margin ratio for the current year and one year ago.
(1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago?
(2) Compute total asset turnover for the current year and one year ago.
(3-a) Compute return on total assets for the current year and one year ago.
(3-b) Based on return on total assets, did Simon's operating efficiency improve or worsen in the Current Year versus 1 Year Ago?
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