Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 35,638	$ 42,065	$ 43,835
Accounts receivable, net	102,276	71,470	59,020
Merchandise inventory	128,592	93,498	62,259
Prepaid expenses	11,251	10,721	4,680
Plant assets, net	314,425	292,748	264,306
Total assets	$ 592,182	$ 510,502	$ 434,100
Liabilities and Equity
Accounts payable	$ 148,928	$ 87,138	$ 57,301
Long-term notes payable	114,670	117,415	94,017
Common stock, $10 par value	162,500	163,500	162,500
Retained earnings	166,084	142,449	120,282
Total liabilities and equity	$ 592,182	$ 510,502	$ 434,100

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

Exercise 17-11 (Algo) Analyzing profitability LO P3

The companys income statements for the Current Year and 1 Year Ago, follow.

For Year Ended December 31	Current Year		1 Year Ago
Sales		$ 769,837		$ 607,497
Cost of goods sold	$ 469,601		$ 394,873
Other operating expenses	238,649		153,697
Interest expense	13,087		13,972
Income tax expense	10,008		9,112
Total costs and expenses		731,345		571,654
Net income		$ 38,492		$ 35,843
Earnings per share		$ 2.37		$ 2.21

Additional information about the company follows.

Common stock market price, December 31, Current Year	$ 33.00
Common stock market price, December 31, 1 Year Ago	31.00
Annual cash dividends per share in Current Year	0.40
Annual cash dividends per share 1 Year Ago	0.20

For both the current year and one year ago, compute the following ratios: 1. Return on equity. 2. Dividend yield. 3a. Price-earnings ratio on December 31. 3b. Assuming Simon's competitor has a price-earnings ratio of 7, 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 3A
• Required 3B

Compute the return on equity for each year.

Return On Equity
	Numerator:			/	Denominator:	=	Return On Equity
	Net income		Preferred dividends	/	Average common stockholders equity	=	Return on equity
Current Year:				/		=	0	%
1 Year Ago:				/		=	0	%

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

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

Compute the dividend yield for each year. (Round your answers to 2 decimal places.)

Dividend Yield
	Numerator:	/	Denominator:	=	Dividend Yield
	Annual cash dividends per share	/	Market price per share	=	Dividend yield
Current Year:		/		=	0	%
1 Year Ago		/		=	0	%

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

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

Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.)

Price-Earnings Ratio
	Numerator:	/	Denominator:	=	Price-Earnings Ratio
	Cost of goods sold	/	Earnings per share	=	Price-earnings ratio
Current Year:		/		=	0
1 Year Ago:		/		=	0