Question

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Simon Company’s year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	29,123			$	34,042		$	35,105
Accounts receivable, net			89,200				62,300			50,700
Merchandise inventory			110,500				83,500			59,000
Prepaid expenses			9,378				8,936			3,901
Plant assets, net			255,402				236,742			205,894
Total assets		$	493,603			$	425,520		$	354,600
Liabilities and Equity
Accounts payable		$	122,907			$	71,913		$	46,807
Long-term notes payable secured by mortgages on plant assets			92,797				97,870			78,367
Common stock, $10 par value			162,500				162,500			162,500
Retained earnings			115,399				93,237			66,926
Total liabilities and equity		$	493,603			$	425,520		$	354,600

The company’s income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit:

For Year Ended December 31	Current Yr						1 Yr Ago
Sales				$	641,684					$	506,369
Cost of goods sold	$	391,427					$	329,140
Other operating expenses		198,922						128,111
Interest expense		10,909						11,646
Income tax expense		8,342						7,596
Total costs and expenses					609,600						476,493
Net income				$	32,084					$	29,876
Earnings per share				$	1.97					$	1.84

(2-a) Compute accounts receivable turnover and inventory turnover
(2-b) For each ratio, determine if it improved or worsened in the current year.

1.

Accounts Receivable Turnover
	Choose Numerator:	/	Choose Denominator:	=	Accounts Receivable Turnover
	Net sales	/	Average accounts receivable, net	=	Accounts receivable turnover
Current Yr:	$641,684	/		=	0	times
1 Yr Ago:	$506,369	/		=	0	times

Inventory Turnover
	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
	Cost of goods sold	/	Average inventory	=	Inventory turnover
Current Yr:	$391,427	/		=	0	times
1 Yr Ago:	$329,140	/		=	0	times

Answer 1