Question

Simon Company’s year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	30,400			$	35,750		$	37,800
Accounts receivable, net			89,700				63,500			50,500
Merchandise inventory			112,000				82,000			53,000
Prepaid expenses			10,850				9,300			4,700
Plant assets, net			278,000				256,500			227,000
Total assets		$	520,950			$	447,050		$	373,000
Liabilities and Equity
Accounts payable		$	129,200			$	74,500		$	50,800
Long-term notes payable secured by mortgages on plant assets			95,500				101,750			81,600
Common stock, $10 par value			163,000				163,000			163,000
Retained earnings			133,250				107,800			77,600
Total liabilities and equity		$	520,950			$	447,050		$	373,000

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				$	745,000					$	600,000
Cost of goods sold	$	461,900					$	372,000
Other operating expenses		230,950						144,000
Interest expense		11,500						13,200
Income tax expense		9,450						8,825
Total costs and expenses					713,800						538,025
Net income				$	31,200					$	61,975
Earnings per share				$	1.91					$	3.80

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?

Profit margin ratio.

Profit Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Profit Margin Ratio
		/		=	Profit margin ratio
Current Year:		/		=		%
1 Year Ago:		/		=		%

Total asset turnover.

Total Asset Turnover
	Choose Numerator:	/	Choose Denominator:	=	Total Asset Turnover
		/		=	Total asset turnover
Current Year:		/		=		times
1 Year Ago:		/		=		times

Return on total assets

Return On Total Assets
	Choose Numerator:	/	Choose Denominator:	=	Return On Total Assets
		/		=	Return on total assets
Current Year:		/		=		%
1 Year Ago:		/		=		%

Answer 1