Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 30,328 $ 35,451 $ 36,196 Accounts receivable, net 89,000 62,300 51,200 Merchandise inventory 113,500 83,500 56,000 Prepaid expenses 9,767 9,306 4,022 Plant assets, net 266,348 248,187 214,582 Total assets $ 508,943 $ 438,744 $ 362,000 Liabilities and Equity Accounts payable $ 127,994 $ 74,889 $ 48,262 Long-term notes payable secured by mortgages on plant assets 96,638 101,920 80,802 Common stock, $10 par value 162,500 162,500 162,500 Retained earnings 121,811 99,435 70,436 Total liabilities and equity $ 508,943 $ 438,744 $ 362,000 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 Current Yr 1 Yr Ago Sales $ 661,626 $ 522,105 Cost of goods sold $ 403,592 $ 339,368 Other operating expenses 205,104 132,093 Interest expense 11,248 12,008 Income tax expense 8,601 7,832 Total costs and expenses 628,545 491,301 Net income $ 33,081 $ 30,804 Earnings per share $ 2.04 $ 1.90 (4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if it improved or worsened in the current year. Compute days' sales in inventory. Days’ Sales In Inventory Choose Numerator: / Choose Denominator: x Days = Days’ Sales In Inventory / x = Days’ sales in inventory Current Yr: / x = days 1 Yr Ago: / x = days

Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 30,328 $ 35,451 $ 36,196 Accounts receivable, net 89,000 62,300 51,200 Merchandise inventory 113,500 83,500 56,000 Prepaid expenses 9,767 9,306 4,022 Plant assets, net 266,348 248,187 214,582 Total assets $ 508,943 $ 438,744 $ 362,000 Liabilities and Equity Accounts payable $ 127,994 $ 74,889 $ 48,262 Long-term notes payable secured by mortgages on plant assets 96,638 101,920 80,802 Common stock, $10 par value 162,500 162,500 162,500 Retained earnings 121,811 99,435 70,436 Total liabilities and equity $ 508,943 $ 438,744 $ 362,000 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 Current Yr 1 Yr Ago Sales $ 661,626 $ 522,105 Cost of goods sold $ 403,592 $ 339,368 Other operating expenses 205,104 132,093 Interest expense 11,248 12,008 Income tax expense 8,601 7,832 Total costs and expenses 628,545 491,301 Net income $ 33,081 $ 30,804 Earnings per share $ 2.04 $ 1.90 (4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if it improved or worsened in the current year. Compute days' sales in inventory. Days’ Sales In Inventory Choose Numerator: / Choose Denominator: x Days = Days’ Sales In Inventory / x = Days’ sales in inventory Current Yr: / x = days 1 Yr Ago: / x = days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Simon Company’s year-end balance sheets follow.

At December 31	Current Yr	1 Yr Ago	2 Yrs Ago
Assets
Cash		$	30,328	$	35,451	$	36,196
Accounts receivable, net			89,000		62,300		51,200
Merchandise inventory			113,500		83,500		56,000
Prepaid expenses			9,767		9,306		4,022
Plant assets, net			266,348		248,187		214,582
Total assets		$	508,943	$	438,744	$	362,000
Liabilities and Equity
Accounts payable		$	127,994	$	74,889	$	48,262
Long-term notes payable secured by mortgages on plant assets			96,638		101,920		80,802
Common stock, $10 par value			162,500		162,500		162,500
Retained earnings			121,811		99,435		70,436
Total liabilities and equity		$	508,943	$	438,744	$	362,000

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	Current Yr	1 Yr Ago
Sales			$	661,626			$	522,105
Cost of goods sold	$	403,592			$	339,368
Other operating expenses		205,104				132,093
Interest expense		11,248				12,008
Income tax expense		8,601				7,832
Total costs and expenses				628,545				491,301
Net income			$	33,081			$	30,804
Earnings per share			$	2.04			$	1.90

(4-a) Compute days' sales in inventory.
(4-b) For each ratio, determine if it improved or worsened in the current year.

Compute days' sales in inventory.

Days’ Sales In Inventory
	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days’ Sales In Inventory
		/		x		=	Days’ sales in inventory
Current Yr:		/		x		=		days
1 Yr Ago:		/		x		=		days

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