Question

Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago $ 31,400 86,400 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-ter notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 110,000 10,850 279,000 $517,650 $ 35,500 $ 37,800 64,000 50,000 81,200 53,000 9,300 4,900 255,000 227,000 $445,000 $ 372,700 $129,600 $ 73,750 $ 50,200 96,500 161,000 130,550 $517,650 100,000 81,400 161,000 161,000 110,250 80,100 $445,000 $ 372,700 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 $ 785,000 $455,300 243, 350 11,700 9,350 719,700 $ 65,300 $ 4.06 1 Yr Ago $ 620,000 $390,600 142,600 13,109 8,650 554,950 $ 65,050 4.04 For both the Current Year and 1 Year Ago, compute the following ratios (1-a) Profit margin ratio. (1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago? Complete this question by entering your answers in the tabs below. Required 1A Required 1B

Answer 1

1 year ago ina Net Sale 785ooo Profit margin Ratio Current year Gross profit Gros Prefitxloo - 785.000 -455306 - 620000-396600 620,000 = 42% -374. Opuating Boxit- quating Cookie - 6785.000-455 360- = (b 20, 000-390600- Net Saly 243350) x 100 142600)x100 620,000 margin Kath Margin Ratio X 100 785ood = CH Rongin Ratio 11% = 14% (Soso x 100 Ner Profit Net Imonex100/= 65300 X 100 Net Sale 78 Sooo 620,000 = 8.32) = 10.49% Profit margin declines in current year I year ago. versus L-b