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[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow. At December 31 Current Year 1 Year Ago 2 Years
[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.
At December 31 | Current Year | 1 Year Ago | 2 Years Ago |
---|---|---|---|
Assets | |||
Cash | $ 31,800 | $ 35,625 | $ 37,800 |
Accounts receivable, net | 89,500 | 62,500 | 50,200 |
Merchandise inventory | 112,500 | 82,500 | 54,000 |
Prepaid expenses | 10,700 | 9,375 | 5,000 |
Plant assets, net | 278,500 | 255,000 | 230,500 |
Total assets | $ 523,000 | $ 445,000 | $ 377,500 |
Liabilities and Equity | |||
Accounts payable | $ 129,900 | $ 75,250 | $ 51,250 |
Long-term notes payable | 98,500 | 101,500 | 83,500 |
Common stock, $10 par value | 163,500 | 163,500 | 163,500 |
Retained earnings | 131,100 | 104,750 | 79,250 |
Total liabilities and equity | $ 523,000 | $ 445,000 | $ 377,500 |
The companys income statements for the current year and 1 year ago, follow.
For Year Ended December 31 | Current Year | 1 Year Ago | ||
---|---|---|---|---|
Sales | $ 673,500 | $ 532,000 | ||
Cost of goods sold | $ 411,225 | $ 345,500 | ||
Other operating expenses | 209,550 | 134,980 | ||
Interest expense | 12,100 | 13,300 | ||
Income tax expense | 9,525 | 8,845 | ||
Total costs and expenses | 642,400 | 502,625 | ||
Net income | $ 31,100 | $ 29,375 | ||
Earnings per share | $ 1.90 | $ 1.80 |
For both the Current Year and 1 Year Ago, compute the following ratios:
(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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