Simon Company’s year-end balance sheets follow.
Simon Company’s year-end balance sheets follow. At
December 31 Current Yr 1Yr Ago 2 Yrs Ago
Assets
Cash $32,200 $36,250 $38,400
Accounts receivable, net 88,700 62,000 50,000
Merchandise inventory 112,500 82,000 53,500
Prepaid expenses 10,800 9,350 4,200
Plant assets, net 280,000 248,500 227,000
Total assets $524,200 $438,100 $373,100
Liabilities and Equity
Accounts payable $129,200 $73,000 $50,000
Long-term notes payable secured by
mortgages on plant assets 97,500 99,000 82,600
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 135,000 103,600 78,000
Total liabilities and equity $524,200 $438,100 $373,100
The company’s income statements for the Current Year and 1 Year Ago, follow.
For Year Ended December 31 Current Yr 1 Yr Ago
Sales $735,000 $580,000
Cost of goods sold $433,650 $359,600
Other operating expenses 235,200 139,200
Interest expense 11,400 12,700
Income tax expense 9,550 8,675
Total costs and expenses 689,800 520,175
Net income $45,200 $59,825
Earnings per share $2.78 $3.68
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?
(2) Total asset turnover.
(3-a) Return on total assets.
(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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