Question

[The following information applies to the questions displayed below.] Simon Company’s year-end balance sheets follow. At...

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

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

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