Question

# Exercise 17-10 Efficiency and profitability analysis LO P3 [The following information applies to the questions displayed...

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 / = %

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