Use the following information for the Exercises below. (Algo)

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Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 32,049	$ 38,235	$ 41,023
Accounts receivable, net	93,845	68,938	54,697
Merchandise inventory	122,808	89,311	58,840
Prepaid expenses	10,853	10,138	4,337
Plant assets, net	300,447	276,138	243,403
Total assets	$ 560,002	$ 482,760	$ 402,300
Liabilities and Equity
Accounts payable	$ 138,046	$ 81,586	$ 51,510
Long-term notes payable	103,175	111,035	88,908
Common stock, $10 par value	163,500	162,500	163,500
Retained earnings	155,281	127,639	98,382
Total liabilities and equity	$ 560,002	$ 482,760	$ 402,300

For both the current year and one year ago, compute the following ratios:

Exercise 17-11 (Algo) Analyzing profitability LO P3

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

For Year Ended December 31	Current Year	1 Year Ago
Sales		$ 728,003		$ 574,484
Cost of goods sold	$ 444,082		$ 373,415
Other operating expenses	225,681		145,344
Interest expense	12,376		13,213
Income tax expense	9,464		8,617
Total costs and expenses		691,603		540,589
Net income		$ 36,400		$ 33,895
Earnings per share		$ 2.24		$ 2.09

Additional information about the company follows.

Common stock market price, December 31, Current Year	$ 32.00
Common stock market price, December 31, 1 Year Ago	30.00
Annual cash dividends per share in Current Year	0.34
Annual cash dividends per share 1 Year Ago	0.17

For both the current year and one year ago, compute the following ratios:

1. Return on equity.

2. Dividend yield.

3a. Price-earnings ratio on December 31.

3b. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth?