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# Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs...

## Question

###### Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs...

Simon Company’s year-end balance sheets follow.

 At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash \$ 32,200 \$ 36,500 \$ 37,800 Accounts receivable, net 87,300 64,000 49,000 Merchandise inventory 111,000 81,200 54,000 Prepaid expenses 10,700 9,250 4,400 Plant assets, net 279,000 258,500 231,000 Total assets \$ 520,200 \$ 449,450 \$ 376,200 Liabilities and Equity Accounts payable \$ 128,400 \$ 73,750 \$ 50,600 Long-term notes payable secured by mortgages on plant assets 97,500 101,500 82,400 Common stock, \$10 par value 162,000 162,000 162,000 Retained earnings 132,300 112,200 81,200 Total liabilities and equity \$ 520,200 \$ 449,450 \$ 376,200

The company’s income statements for the Current Year and 1 Year Ago, follow.

 For Year Ended December 31 Current Yr 1 Yr Ago Sales \$ 725,000 \$ 600,000 Cost of goods sold \$ 449,500 \$ 378,000 Other operating expenses 232,000 150,000 Interest expense 11,100 13,000 Income tax expense 9,350 9,000 Total costs and expenses 701,950 550,000 Net income \$ 23,050 \$ 50,000 Earnings per share \$ 1.42 \$ 3.09

For both the Current Year and 1 Year Ago, compute the following ratios:

(1-a) Profit margin ratio.
(1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago?

• Required 1A
• Required 1B

Profit margin ratio.

 Profit Margin Ratio Choose Numerator: / Choose Denominator: = Profit Margin Ratio / = Profit margin ratio Current Year: / = % 1 Year Ago: / = %

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