For both the current year and one year ago, compute the following ratios: 1. Return on equity. 2. Dividend yield. 3a. Price-earnings ratio on December 31. 3b. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth?
For both the current year and one year ago, compute the following ratios: 1. Return on equity. 2. Dividend yield. 3a. Price-earnings ratio on December 31. 3b. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the questions displayed below.]
Simon Company's year-end balance sheets follow.
At December 31
Current Year
1 Year Ago
2 Years Ago
Assets
$ 33,783
$ 39,888
71,898
89,474
10,785
286,555
$ 39,900
56,491
58,411
4,616
256,082
Cash
Accounts receivable, net
Merchandise inventory
97,913
125,594
10,989
310,097
Prepaid expenses
Plant assets, net
Total assets
$ 578,376
$ 498,600
$ 415,500
Liabilities and Equity
Accounts payable
Long-term notes payable
Common stock, $10 par value
Retained earnings
$ 144,016
$ 54,298
$81,735
113,531
163,500
139,834
109,822
163,500
91,826
163,500
105,876
161,038
Total liabilities and equity
$ 578,376
$ 498,600
$ 415,500
For both the current year and one year ago, compute the following ratios:
Exercise 17-11 (Algo) Analyzing profitability LO P3
The company's income statements for the Current Year and 1 Year Ago, follow.
For Year Ended December 31
Current Year
1 Year Ago
Sales
$ 751,889
$ 593,334
$ 458,652
Cost of goods sold
Other operating expenses
Interest expense
$ 385,667
150,114
13,647
8,900
233,086
12,782
Income tax expense
Total costs and expenses
9,775
714,295
558,328
Net income
$ 37,594
$ 35,006
Earnings per share
$ 2.31
$ 2.15
Additional information about the company follows.
$ 30.00
Common stock market price, December 31, Current Year
Common stock market price, December 31, 1 Year Ago
28.00
Annual cash dividends per share in Current Year
Annual cash dividends per share 1 Year Ago
0.30
0.15
For both the current year and one year ago, compute the following ratios:
1. Return on equity.
2. Dividend yield.
3a. Price-earnings ratio on December 31.
3b. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b88b868-363a-465f-b48a-c6be48716ff6%2Fbbd961e9-d6c1-4358-a1fa-3e0bcf0f4532%2Fo72tnp7_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
Simon Company's year-end balance sheets follow.
At December 31
Current Year
1 Year Ago
2 Years Ago
Assets
$ 33,783
$ 39,888
71,898
89,474
10,785
286,555
$ 39,900
56,491
58,411
4,616
256,082
Cash
Accounts receivable, net
Merchandise inventory
97,913
125,594
10,989
310,097
Prepaid expenses
Plant assets, net
Total assets
$ 578,376
$ 498,600
$ 415,500
Liabilities and Equity
Accounts payable
Long-term notes payable
Common stock, $10 par value
Retained earnings
$ 144,016
$ 54,298
$81,735
113,531
163,500
139,834
109,822
163,500
91,826
163,500
105,876
161,038
Total liabilities and equity
$ 578,376
$ 498,600
$ 415,500
For both the current year and one year ago, compute the following ratios:
Exercise 17-11 (Algo) Analyzing profitability LO P3
The company's income statements for the Current Year and 1 Year Ago, follow.
For Year Ended December 31
Current Year
1 Year Ago
Sales
$ 751,889
$ 593,334
$ 458,652
Cost of goods sold
Other operating expenses
Interest expense
$ 385,667
150,114
13,647
8,900
233,086
12,782
Income tax expense
Total costs and expenses
9,775
714,295
558,328
Net income
$ 37,594
$ 35,006
Earnings per share
$ 2.31
$ 2.15
Additional information about the company follows.
$ 30.00
Common stock market price, December 31, Current Year
Common stock market price, December 31, 1 Year Ago
28.00
Annual cash dividends per share in Current Year
Annual cash dividends per share 1 Year Ago
0.30
0.15
For both the current year and one year ago, compute the following ratios:
1. Return on equity.
2. Dividend yield.
3a. Price-earnings ratio on December 31.
3b. Assuming Simon's competitor has a price-earnings ratio of 7, which company has higher market expectations for future growth?
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