Question
[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 | $ 32,200 | $ 35,000 | $ 38,600 |
Accounts receivable, net | 89,900 | 63,500 | 49,000 |
Merchandise inventory | 110,000 | 83,200 | 54,000 |
Prepaid expenses | 10,650 | 9,350 | 4,600 |
Plant assets, net | 279,000 | 252,000 | 233,000 |
Total assets | $ 521,750 | $ 443,050 | $ 379,200 |
Liabilities and Equity | |||
Accounts payable | $ 130,000 | $ 73,000 | $ 50,400 |
Long-term notes payable | 96,000 | 101,250 | 81,200 |
Common stock, $10 par value | 161,500 | 161,500 | 161,500 |
Retained earnings | 134,250 | 107,300 | 86,100 |
Total liabilities and equity | $ 521,750 | $ 443,050 | $ 379,200 |
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 | $ 610,000 | ||
Cost of goods sold | $ 451,350 | $ 384,300 | ||
Other operating expenses | 237,150 | 152,500 | ||
Interest expense | 12,400 | 13,000 | ||
Income tax expense | 9,400 | 8,925 | ||
Total costs and expenses | 710,300 | 558,725 | ||
Net income | $ 54,700 | $ 51,275 | ||
Earnings per share | $ 3.39 | $ 3.17 |
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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