Question

Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago 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 $ 30,400 86,500 111,500 10,850 281,000 $520, 250 $ 36,250 $ 38,000 62,500 50,500 83,800 54,000 9,450 5,500 251,000 229,000 $443,000 $ 377,000 $130,000 $ 74,000 $ 50,400 97,000 163,500 129,750 $520,250 102,000 82,400 163,500 163,500 103,500 80,700 $443,000 $ 377,000 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 $745,000 $447,000 238,400 12,300 9,400 707, 100 $ 37,900 $ 2.32 1 Yr Ago $ 590,000 $383,500 141,600 12,800 8,575 546,475 $ 43,525 $ 2.66 For both the Current Year and 1 Year Ago, compute the following ratios:

Answer 1

Solution:

3A.

	Choose Numerator	/	Choose denominator	=	Return on total assets
	Net Income	/	Average Total Assets	=	Return on total assets
Current year	37,900	/	4,81,625	=	7.87
1 Year Ago:	43,525	/	4,10,000	=	10.62

3B

Return on Total assets

worsen

Copy of HomeworkLib2 - Microsoft Excel (Product Activation Failed) X File Home Insert Page Layout Formulas Data Review View X % Cut AutoSum Calibri 11 A A z Wrap Text General Normal Bad Good Ea Copy Fill- Paste B 1 U- A, *Merge & Center Calculation Conditional Format as Neutral Formatting Table Check Cell Insert Delete Format Format Painter Clear Sort & Find & Filter - Select Editing Clipboard Font Alignment Number Styles Cells G89 fx A B С D E F G H 1 J K L M 73 74 75 76 Choose Numerator Net Income 37,900 43,525 11 Choose denominator 7 Average Total Assets / 4,81,625 / 4,10,000 Return on total assets Return on total assets 7.87 10.62 77 Current year 1 Year Ago: 78 Return on Total assets worsen 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 KO Sheet160 Sheet161 Sheet162 Sheet163 Sheet164 Sheet165 Sheet166 Sheet167 Sheet168 Sheet169 Sheet170 I Ready M 100% Type here to search 1 O חד 25% O » ENG 02:12 21-09-2020 Zoom In

Copy of HomeworkLib2 - Microsoft Excel (Product Activation Failed) X File Home Insert Page Layout Formulas Data Review View X ! % Cut AutoSum Calibri 11 A A z Wrap Text General Normal Bad Good la Copy Fill Paste B 1 U- A, Merge & Center GP, % Calculation Conditional Format as Neutral Formatting Table Check Cell Insert Delete Format Format Painter Clear Sort & Find & Filter - Select Editing Clipboard Font Alignment Number Styles Cells C91 fac A B C D E F G H 1 73 74 75 Choose Numerator Net Income 76 / Choose denominator / Average Total Assets / =(520250+443000)/2 / =(443000+377000)/2 Return on total assets Return on total assets =ROUND(C77/E77* 100,2) =ROUND(C78/E78*100,2) 77 = Current year 1 Year Ago: 37900 43525 78 Return on Total assets worsen 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 KO Sheet160 Sheet161 Sheet162 Sheet163 Sheet164 Sheet165 Sheet166 Sheet167 Sheet168 Sheet169 Sheet170 Ready O 100% U 1 Type here to search O חד 25% D » ENG 02:13 21-09-2020