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The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs

The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.

At December 31 Current Yr 1 Yr Ago 2 Yrs Ago
Assets
Cash $ 32,000 $ 36,250 $ 38,000
Accounts receivable, net 87,000 63,500 49,500
Merchandise inventory 111,500 83,000 53,500
Prepaid expenses 10,550 9,300 4,600
Plant assets, net

280,000

249,000 234,000
Total assets $ 521,050 $ 441,050 $ 379,600
Liabilities and Equity
Accounts payable $ 128,000 $ 74,750 $ 51,400
Long-term notes payable secured by mortgages on plant assets 96,500 101,750 82,000
Common stock, $10 par value 162,000 162,000 162,000
Retained earnings 134,550 102,550 84,200
Total liabilities and equity $ 521,050 $ 441,050 $ 379,600

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

For Year Ended December 31 Current Yr 1 Yr Ago
Sales $ 765,000 $ 550,000
Cost of goods sold $ 466,650 $ 352,000
Other operating expenses 237,150 126,500
Interest expense 12,400 13,400
Income tax expense 9,600 8,875
Total costs and expenses 725,800 500,775
Net income $ 39,200 $ 49,225
Earnings per share $ 2.42 $ 3.04

For both the Current Year and 1 Year Ago, compute the following ratios:

(1-a) Profit margin ratio. (1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago?

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