Question

Simon Company’s year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	31,200			$	35,500		$	37,600
Accounts receivable, net			89,200				63,500			50,000
Merchandise inventory			112,000				83,000			52,000
Prepaid expenses			10,250				9,350			4,300
Plant assets, net			280,000				251,000			231,000
Total assets		$	522,650			$	442,350		$	374,900
Liabilities and Equity
Accounts payable		$	129,200			$	74,500		$	51,400
Long-term notes payable secured by mortgages on plant assets			95,000				98,500			83,800
Common stock, $10 par value			164,000				164,000			164,000
Retained earnings			134,450				105,350			75,700
Total liabilities and equity		$	522,650			$	442,350		$	374,900

The company’s income statements for the Current Year and 1 Year Ago, follow.

For Year Ended December 31	Current Yr						1 Yr Ago
Sales				$	755,000					$	570,000
Cost of goods sold	$	460,550					$	353,400
Other operating expenses		234,050						131,100
Interest expense		11,400						12,900
Income tax expense		9,500						8,775
Total costs and expenses					715,500						506,175
Net income				$	39,500					$	63,825
Earnings per share				$	2.41					$	3.89

For both the Current Year and 1 Year Ago, compute the following ratios:

Return on total assets

	Return On Total Assets Choose Numerator: / Choose Denominator: = Return On Total Assets / = Return on total assets Current Year: / = 0 % 1 Year Ago: / = 0 %

Answer 1

Return on Total Assets 1 Denominator 7 Avg Total assets 482500 408625 Numerator Net income 39500 63825 = || = Return on Total Assets Return on Total Assets 8.2 15.6 Current Year 1 Year ago