Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago At December 31 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 $ 31,300 $ 34,700 $ 36,300 89,800 62,100 55,300 22,222 83,000 52,900 10,842 9,459 3,889 410,836 265,741 201,611 $565,000 $455,000 $ 350,000 $137,871 $ 78,433 $ 46,662 106,220 104,650 76,576 162,500 162,500 162,500 158,409 109,417 64,262 $565,000 $455,000 $ 350,000 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 $734,500 $448,045 227,695 12,487 9,549 697,776 $ 36,724 1 Yr Ago $ 541,450 $351,943 136,987 12,453 8,122 509,505 $ 31,945 2.26 $ 1.97 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 $ 28.00 26.00 0.32 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 6, which company has higher market expectations for future growth? 3. Dividend vield. 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: 1 Required 1 Required 2 Required 2a Required 3 Compute the price-earnings ratio for each year. (Round your answ swers to 2 decimal places.) = Choose Numerator: Price-Earnings Ratio 1 Choose Denominator: 1 1 Price-Earnings Ratio Price-earnings ratio = !! Current Year: 1 Year Ago: 1 = Required 1 Required 2 Required 2a Required 3 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? Required 1 Required 2 Required 2a Required 3 Compute the dividend yield for each year. (Round your answers to 2 decimal places.) Choose Numerator: = Dividend Yield 1 Choose Denominator: 1 1 II Dividend Yield Dividend yield % II Current Year: 1 Year Ago 1 = %
