Simon Companys yearend balance sheets follow At December 31

Simon Company\'s year-end balance sheets follow At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net 2015 2014 2013 30,200 36,000 37,200 89,800 61,500 49,500 110,000 81,200 52,500 10,300 9,400 5,400 280,000 255,500 231,000 Total assets $520,300 $443,600 $375,600 Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings $130,000 73,500 $ 50,20o 95,500100,500 80,400 63,500163,500 163,500 31,300 106,10081,500 Total liabilities and equity $520,300 $443,600 $375,600 The company\'s income statements for the years ended December 31, 2015 and 2014, follow. For Year Ended December 312015 2014 Sales Cost of goods sold Other operating expenses Interest expense Income taxes $675,000 610,000 $418,500 189,000 12,300 9,450 $390,400 146,400 13,000 8,650 Total costs and expenses 629,250 $ 45,750 $ 2.80 558,450 $51,550 $ 3.15 Net income Earnings per share

Solution

2015:

Profit Margin Ratio= $45,750/$675,000 x 100=6.78%

2016:

Profit Margin Ratio= $51,550/$610,000 x 100=8.45%

2.

2015: Net Assets = Beginning Assets + Ending Assets/2

=2014 Ending Assets + 2015 Ending Assets/2

=$443,600+$520,300/2

=$963,900/2

=$481,950

2014: = Beginning Assets + Ending Assets/2

=2013 Ending Assets + 2014 Ending Assets/2

=$375,600+$443,600/2

=$819,200/2

=$409,600

Total Assets Turnover = Sales /Avg Net Assets

                                               

2015:

Total Assets Turnover=$675,000/$481,950= 1.40 times

2014:

Total Assets Turnover=$610,000/$409,600= 1.49 times

2015:

Return on Total Assets= Net income / Avg total Assets x 100

=$45,750/$481,950 x 100=9.49%

                                               

2014:

Return on Total Assets= Net income / Avg total Assets

=$51,550/$409,600 x 100=12.59%

1)

Profit Margin Ratio

Choose Numerator

/

Choose Donominator

=

Profit Margin Ratio

2015

$45,750

/

$675,000

=

6.78%

2014

$51,550

/

$610,000

=

8.45%

2)

Total Assets Turnover

Choose Numerator

/

Choose Donominator

=

Total Assets Turnover

2015

$675,000

/

$481,950

=

1.40

2014

$610,000

/

$409,600

=

1.49

3)

Return on Total Assets

Choose Numerator

/

Choose Donominator

=

Return on Total Assets

2015

$45,750

/

$481,950

=

9.49%

2014

$51,550

/

$409,600

=

12.59%

Profit Margin Ratio
	Choose Numerator	/	Choose Donominator	=	Profit Margin Ratio
2015	$45,750	/	$675,000	=	6.78%
2014	$51,550	/	$610,000	=	8.45%