180 outof180points(100%) - MGMT-026

?

180 outof180points (100%)

Simon Company's year-end balance sheets follow.

At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses

Plant assets, net

20 14

20 13

20 12

$ 31,600 88,500

11 2,000 10,400

278,000

$ 35,500 6 1,000 83,600 9,450

257,000

$ 37,400 5 1,000 52,500 5,000 234,000

Total assets

$ 520,500 $446,550 $ 379,900

Liabilities and Equity Accounts payable Long-term notes payable secured by

mortgages on plant assets Common stock, $10 par v alue Retained earnings

Total liabilities and equity

$ 129,200 $ 73,000 $ 50,000

96,000 162,000 133,300

100,000 162,000 111 ,550

82,200 162,000

85,700

$ 520,500 $446,550 $ 379,900

The company's income statements forthe y ears ended December 31, 20 14 and 20 13, follow.

For Year Ended December 31 Sales

20 14 $675,000

Cost ofgoods sold

$398,250

Other operating expenses

202,500

Interest expense Income taxes

12,300 9,550

2013 $630,000

$390,600

144,900

13,000 8,925

Total costs and expenses

622,600

557,425

Net income

$ 52.400

$ 72,575

Earnings per share

$ 3.23

$ 4.48

Evaluate the company's efficiency and profitabili~/ by computing the following for 20 14 and 20 13.

award:

1. 10 out of

?? ?? ?? ?? ?? ?? ??l1>0o.i0n0u;- ?

(1)Profit margin ratio.

1201 4 201 3

Choose Numerator:

Net income

./

$

52 ,400. /

$

72,575. /

Profit Margin Ratio

Choose Denominator:

Profit Margin Ratio

? "'"'"'"""' Netsales

.$

./

675,000. /

7.8%

$

630,000. /

11 .5%

g.vard:

2 .

10 out of 10.00

?? ? ? ? ? ? ?points ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ..

(2)Total asset turnover.

---- - Choose Numerator:

Net sales

./

2014 $

675,000./ I

2013 $

630,000./ I

Tota I Asset Turnover

c:noose Denominator:

Total Asset Turnover

I Average total assets ./ =

Total asset turnover

$

~ 483,525. /

1.4 times

$

413,225./ =

1.5 times

S"Nflrd:

3. 10 out of 10.00

(3)Return on total assets.

-- Choose Numerator: ....... Net income

Return On Total Assets

..--"'IChoose Denominator:

Average total assets ./

2014

52 ,400. /

$

483,525. /

2013

72,575. /

$

4 13,225. /

Return On Total Assets

=

Return on total assets

--1--

=

10.8%

=

17.6%

{The foUovdng inforn1ation applies to the questions displayed belov1.]

Simon Company's year-end balance sheets follow.

At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses

Plant assets, net

2014

2013

2012

$ 30,521 $ 35,330 $ 36,791 88,458 61,221 48,578

107,980 80,098 51,746 9,542 9,00 1 3,969

265,733 247,3 10 219,716

Total assets

$ 502,234 $432,960 $ 360,800

Liabilrties 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

$ 126,307 $ 73,1 70 $ 47,1 49

93,476 162,500 11 9,95 1

102,568 162,500 94,722

78,939 162,500

72,2 12

$ 502,234 $432,960 $ 360,800

The company's income statements for the years ended December 31, 20 14 and 20 13, follow.

For Year Ended December 31 Sales

2014 $652,904

Cost ofgoods sold

$398,27 1

Other operating expenses

202,400

Interest expense Income taxes

11 ,099 8,488

2013 $5 15,222

$334,894

130,351

11 ,850 7,728

Total costs and expenses

620,258

484,823

Net income

$ 32,646

$ 30,399

Earnings per share

$ 2.0 1

$ 1.87

Calculate the company's long-term risk and capital structure positions at the end of 20 14 and 20 13 by computing tl1e following ratios.

4.

SW91'd:

10 out of

10.00

(1) Debt and equity ratios.

Choose Numerator: Total liabilities 201 4: $ 1201 3: T$

201 4 : 1201 3:

Choose Numerator: Total equi~/ $ $

I v'j I 219,783v' I 175,738v' I

I v'j I 282,45 1v' I 257,222v' I

Debt Ratio

Choose Denominator:

JTotal assets

v'

$

502,234v'

1$

432.960v'

Egui!}! Ratio

~

Choose Denominator:

JTotal assets

v'

$

502,234v'

$

432,960v'

=

=

=

=

=

= =

=- -

Debt Ratio Debt ratio

43.8% 40.6%

Equity Ratio Equity ratio

56.2% 59.4%

5 .

SW91'd:

10 out of 10.00

?????????????????????????????points????

(2)Debt-to-eQuity ratio.

Debt-T0-Eaui1V Ratio

Choose Numerator:

I Choose Denominator:

---~~

1-----11Total liabilities

-10~~~? To tal

eQui~/

v'.l =

201 4: $

219.783_.I I $

282,45 1_.I =

2013: $

175 ,738 _.I

$

257,222_.I =

Debt-To.Equity Ratio

l

Debt-to-eQui~/ ratio

0.78 to 1

0.68 to 1

 ................
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