Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below. Simon Company's year-end balance sheets follow 2017 2015 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets 2016 $ 30,800 $ 35,750 $ 37,400 86,100 63, 000 51,000 113,000 82,000 54,000 10,350 9,500 5,500 277,000 258,500 227, 000 $517,250 $448,750 $374,900 Liabilities and Equity Accounts payable Long-term notes payable secured by $128,000 $ 74,250 $ 51,000 mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 96,500 100,500 80,800 163,000 163,000 163,000 129, 750111,000 80,100 $517,250 $448,750 $374,900 The company's income statements for the years ended December 31, 2017 and 2016, follow. 2017 2016 For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income taxes Total costs and expenses Net income $715,000 $ 610,000 $414,700 221,650 11,300 9.550 $390,400 152,500 12,600 8.700 657.200 $ 57,800 $3.55 564,200 45,800 $ 2.81 Earnings per share Evaluate the company's efficiency and profitability by computing the following for 2017 and 2016 (1) Profit margin ratio Profit Margin Ratio Choose Numerator: Choose Denominator Profit Margin Ratio Profit margin ratio 2017 2016

Explanation / Answer

Profit margin ratio :

Choose numerator / Choose denominator = Profit margin ratio Net income / Sales = Profit margin ratio 2017 57800 / 715000 = 8.08% 2016 45800 / 610000 = 7.51%

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