Question

Required information [The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago $ 31,000 87,300 110,500 10,950 279,000 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 35,750 $ 38,600 63,500 49,500 82,400 54,000 9,400 5,500 257,000 231,000 $448,050 $ 378,600 $129,600 $ 74,000 $ 51,400 96,500 160,500 132,150 $518,750 98,750 80,800 160,500 160,500 114,800 8 5,900 $448,050 $ 378,600 The company's income statements for the Current Year and 1 Year Ago, follow. For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Yr $775,000 $ 465,000 240, 250 11,900 9,550 726,700 $ 48,300 $ 3.01 1 Yr Ago $ 590,000 $365,800 147,500 13,100 8,900 535,300 $ 54,700 $ 3.41 For both the Current Year and 1 Year Ago, compute the following ratios:

Answer 1

Answer:

Current Ratio = Current Assets / Current Liabilities

Current Year = 239750 / 129600 = 1.85

1 Year ago = 191050 / 74000 = 2.58

Total Asset Turnover = Sales / Avg. Total Assets

Current Year = 775000 / ( 518750 + 448050 ) / 2 = 775000 / 483400 = 1.60

1 Year ago = 590000 / ( 448050 + 378600 ) / 2 = 590000 / 413325 = 1.43

Return on Total Assets = Net Income / Avg. Total Assets

Current Year = 48300 / 483400 = 9.99%

1 Year ago = 54700 / 413325 = 13.23%