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 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 $ 37,196 89,500 114,000 11,978 359,398 $ 612,072 $ 43,478 $ 43,531 62,100 51,600 82,500 52,000 11,413 4,837 328,157 274,932 $ 527,648 $426,900 $ 156,978 $ 91,848 $ 58,041 118,522 162,500 174,072 $ 612,072 125,000 97,175 162,500 162,500 148,300 109,184 $ 527,648 $426,900 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 $ 795,694 $ 485,373 246,665 13,527 10,344 755,909 $ 39,785 $ 2.45 1 Yr Ago $ 627,901 408,136 158,859 14,442 9,419 590,856 $ 37,045 $ 2.28

Answer 1

1
Days' Sales Uncollected
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days' Sales Uncollected
	Accounts receivable	/	Net sales	x	365	=	Days' Sales Uncollected
Current yr.	$89,500	/	$795,694	x	365	=	41.1	days
1 Yr. ago	$62,100	/	$627,901	x	365	=	36.1	days
2
Accounts Receivable Turnover
	Choose Numerator:	/	Choose Denominator:	=	Accounts Receivable Turnover
	Net sales	/	Average accounts receivable, net	=	Accounts receivable turnover
Current yr.	$795,694	/	$75,800	=	10.5	times
1 Yr. ago	$627,901	/	$56,850	=	11.0	times
3
Inventory Turnover
	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
	Cost of goods sold	/	Average inventory	=	Inventory turnover
Current yr.	$485,373	/	$98,250	=	4.9	times
1 Yr. ago	$408,136	/	$67,250	=	6.1	times
4
Days’ Sales In Inventory
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days’ Sales In Inventory
	Ending inventory	/	Cost of goods sold	x	365	=	Days’ sales in inventory
Current yr.	$114,000	/	$485,373	x	365	=	85.7	days
1 Yr. ago	$82,500	/	$408,136	x	365	=	73.8	days