Simon Company\'s year-end balance sheets follow. 2017 2016 2015 At December 31 A

Question

Simon Company's year-end balance sheets follow. 2017 2016 2015 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 $ 31,800 $ 35,625 $ 37,800 89,500 62,500 50,200 112,500 82,500 54,000 9,375 5,000 278,500 255,000 230,500 $ 523,000 $445,000 $377,500 $ 129,900 $ 75,250 $ 51,250 98,500 101,500 83,500 163,500 163,500 163,500 131,100 104,750 79,250 $523,000 $445,000 $377,500 The company's income statements for the years ended December 31, 2017 and 2016, follow. For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income taxes Total costs and expenses Net income 2017 $673,500 $411,225 209,550 12,100 9,525 642,400 $ 31,100 $ 1.90 2016 $ 532,000 $ 345,500 134,980 13,300 8,845 502,625 $ 29,375 $ 1.80 Earnings per share Evaluate the company's efficiency and profitability by computing the following for 2017 and 2016.

Explanation / Answer

Profit Margin Ratio=net income/total sales

2016=31,100/673,500*100= 4.62%

2017=29,375/532,000*100=5.52%

Total Asset Turnover=total asset/total sales

2016=445,000/673,500=5.5 times

2017=523,000/532,000=3.72 times

Return on asset turnover=Net income/ total asset,

2016=29,375/445,000*100=6.6%

2017=31,100/532,000*100=5.85%

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