Question

Simon Company’s year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	26,445			$	30,912		$	31,878
Accounts receivable, net			89,500				62,900			51,500
Merchandise inventory			114,000				85,000			56,000
Prepaid expenses			8,516				8,114			3,542
Plant assets, net			209,763				199,474			179,080
Total assets		$	448,224			$	386,400		$	322,000
Liabilities and Equity
Accounts payable		$	111,608			$	65,302		$	42,504
Long-term notes payable secured by mortgages on plant assets			84,266				88,872			71,162
Common stock, $10 par value			162,500				162,500			162,500
Retained earnings			89,850				69,726			45,834
Total liabilities and equity		$	448,224			$	386,400		$	322,000

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				$	582,691					$	459,816
Cost of goods sold	$	355,442					$	298,880
Other operating expenses		180,634						116,333
Interest expense		9,906						10,576
Income tax expense		7,575						6,897
Total costs and expenses					553,557						432,686
Net income				$	29,134					$	27,130
Earnings per share				$	1.79					$	1.67

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

Complete this question by entering your answers in the tabs below.

• Required 3A
• Required 3B

Compute inventory turnover.

	Inventory Turnover Choose Numerator: / Choose Denominator: = Inventory Turnover / = Inventory turnover Current Yr: / = times 1 Yr Ago: / = times

Answer 1

Requirement: 3a Year Inventory turn over ratio 1. Denominator Average Inventory 1/ 99500 70500 Numerator Cost of goods sold 355442 298880 = | Inventory Turn over ratio Inventory Turn over ratio 3.6 times 4.2 times Current Year 1 Year Ago Requirement: 3b Worsed