Simon Companys year-end balance sheets follow. 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 yield.
Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago $ 32,000 $ 34,100 $ 36,500 88,900 64,000 59,800 71,152 84,100 58,100 10,782 10,395 3,626 382,166 302,405 161,974 $585,000 $495,000 $320,000 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 $142,752 $ 82,818 $ 43,085 111,080 116,127 70,720 162,500 162,500 162,500 168,668 133,555 43,695 $585,000 $495,000 $320,000 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 Current Yr $760,500 $463,905 235,755 12,929 9,887 722,476 $ 38,024 1 Yr Ago $ 589,050 $382,883 149,030 13,548 8,836 554, 297 $ 34,753 2.14 Earnings per share $ 2.34 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 $31.00 29.00 0.26 0.13 For both the Current Year and 1 Year Ago, compute the following ratios: 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 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: Choose Denominator: Return On Common Stockholders' Equity Return on common stockholders' equity Current Year: 1 Year Ago: Required 1 Required 2 > 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 yield. 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 1 Choose Denominator: Choose Numerator: = Price-Earnings Ratio Price-earnings ratio Current Year: 1 Year Ago: Required 1 Required 2a > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a 11 Required 3 Assuming Simon's competitor has a price-earnings ratio of 6, which company has higher market expectations for future growth? arowth? Which company has higher market expectations for future growth? ............... 1
