Question

# Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs...

Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash \$ 30,400 \$ 36,250 \$ 38,200 Accounts receivable, net 86,700 63,000 50,000 Merchandise inventory 110,000 81,800 53,500 Prepaid expenses 10,750 9,300 4,500 Plant assets, net 277,000 248,500 230,000 Total assets \$ 514,850 \$ 438,850 \$ 376,200 Liabilities and Equity Accounts payable \$ 129,600 \$ 75,750 \$ 51,200 Long-term notes payable secured by mortgages on plant assets 97,500 101,250 83,800 Common stock, \$10 par value 163,500 163,500 163,500 Retained earnings 124,250 98,350 77,700 Total liabilities and equity \$ 514,850 \$ 438,850 \$ 376,200 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 \$ 715,000 \$ 560,000 Cost of goods sold \$ 414,700 \$ 352,800 Other operating expenses 221,650 140,000 Interest expense 12,200 13,100 Income tax

expense 9,500 8,650 Total costs and expenses 658,050 514,550 Net income \$ 56,950 \$ 45,450 Earnings per share \$ 3.48 \$ 2.78 For both the Current Year and 1 Year Ago, compute the following ratios:

(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?

 3a Return On Total Assets Choose Numerator: / Choose Denominator: = Return On Total Assets Net income / Average total assets = Return On Total Assets Current Yr 56950 / 476850 = 11.9% 1 Yr Ago 45450 / 407525 = 11.2% 3b Return on total assets improve in the Current Year Workings: Average total assets: Current Yr 476850 =(514850+438850)/2 1 Yr Ago 407525 =(376200+438850)/2

#### Earn Coins

Coins can be redeemed for fabulous gifts.