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 $ 32,111 89,500 112,000 10,341 289,624 $ 533,576 $ 37,534 $ 37,948 62,600 51,900 83,500 60,000 9,853 4,216 266,492 221,736 $ 459,979 $ 375,800 ok ht $135,518 $ 79,291 $ 50,598 ht nces 102,319 162,500 133, 239 $533,576 107,911 84,713 162,500 162,500 110,277 77,989 $ 459,979 $ 375, 800 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 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Yr $ 693,649 $ 423, 126 215,031 11,792 9,01 658,966 $ 34,683 1 Yr Ago $ 547,375 $ 355,794 138,486 12,590 8,211 515,081 $ 32,294 $ 2.13 $ 1.99

Answer 1

1 Current Yr: Yr / = 5.o 3a) Inventory Turnover Choose choose Numerator: / Denominator: Inventory Turnover cost of goods sold / Average inventory = Inventory Turnover $ 423, 126 $ 97,750 4.3 timy $ 355,794 / $ 71,750 times calculation : Average Inventory = (Beginning inventory & Ending inventory)&2 Curent Yr : Average Inventory = ($83,500+ $112,000) = 2 $ 97,750 14 Ago: Average Inventory = ($60,000 + $83,500) + 2 : $71,750 3b) Inventory Turnover Worsen