Question

Exercise 17-10 Efficiency and profitability analysis LO P3

[The following information applies to the questions displayed below.]

Simon Company’s year-end balance sheets follow.

At December 31	2017			2016			2015
Assets
Cash	$	32,000		$	36,250		$	37,600
Accounts receivable, net		89,400			61,500			51,000
Merchandise inventory		111,000			82,400			53,500
Prepaid expenses		10,700			9,200			5,300
Plant assets, net		280,000			250,500			228,000
Total assets	$	523,100		$	439,850		$	375,400
Liabilities and Equity
Accounts payable	$	128,000		$	73,500		$	51,600
Long-term notes payable secured by mortgages on plant assets		95,500			98,500			81,200
Common stock, $10 par value		161,000			161,000			161,000
Retained earnings		138,600			106,850			81,600
Total liabilities and equity	$	523,100		$	439,850		$	375,400

The company’s income statements for the years ended December 31, 2017 and 2016, follow.

For Year Ended December 31	2017						2016
Sales				$	685,000					$	590,000
Cost of goods sold	$	411,000					$	371,700
Other operating expenses		198,650						141,600
Interest expense		11,600						12,800
Income taxes		9,450						8,550
Total costs and expenses					630,700						534,650
Net income				$	54,300					$	55,350
Earnings per share				$	3.37					$	3.44

Evaluate the company's efficiency and profitability by computing the following for 2017 and 2016.

(1) Profit margin ratio

Profit Margin Ratio
	Choose Numerator:	/	Choose Denominator:	=	Profit Margin Ratio
		/		=	Profit margin ratio
2017		/		=		%
2016		/		=		%

(2) Total asset turnover.

Total Asset Turnover
	Choose Numerator:	/	Choose Denominator:	=	Total Asset Turnover
		/		=	Total asset turnover
2017		/		=		times
2016		/		=		times

(3) Return on total assets.

Return On Total Assets
	Choose Numerator:	/	Choose Denominator:	=	Return On Total Assets
		/		=	Return on total assets
2017		/		=		%
2016		/		=		%

Answer 1

Note: Final answers rounded to 1 decimal being it is not mentioned in question.