Question

Simon Company’s year-end balance sheets follow.

At December 31	2017			2016			2015
Assets
Cash	$	31,800		$	36,000		$	37,200
Accounts receivable, net		88,100			62,000			50,500
Merchandise inventory		111,000			83,800			54,500
Prepaid expenses		10,300			9,350			4,600
Plant assets, net		280,000			257,000			235,000
Total assets	$	521,200		$	448,150		$	381,800
Liabilities and Equity
Accounts payable	$	129,200		$	75,250		$	50,400
Long-term notes payable secured by mortgages on plant assets		98,000			100,000			82,600
Common stock, $10 par value		161,500			161,500			161,500
Retained earnings		132,500			111,400			87,300
Total liabilities and equity	$	521,200		$	448,150		$	381,800

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

For Year Ended December 31	2017						2016
Sales				$	755,000					$	640,000
Cost of goods sold	$	468,100					$	409,600
Other operating expenses		218,950						147,200
Interest expense		11,300						13,400
Income taxes		9,550						8,575
Total costs and expenses					707,900						578,775
Net income				$	47,100					$	61,225
Earnings per share				$	2.92					$	3.79
(1) Profit margin ratio. Profit Margin Ratio 1 Choose Denominator: Choose Numerator: = Profit Margin Ratio Profit margin ratio 2017 2016

Answer 1

Profit margin Profit margin Profit margin / Denominator Numerator / Net sales Net Income / 755000 2017 47100 6.2 = % / 640000 2016 61225 9.6 Total Assets Turn over / Denominator Total Assets Turn over Numerator Avg Total Assets Total Assets Turn over Net Sales times / 755000 2017 484675 1.6 times / 640000 2016 414975 1.5 Return on Total Assets / Denominator Return on Total Assets Numerator Avg Total assets Net income Return on Total Assets 2017 47100 484675 9.7 2016 61225 414975 14.8