BMAL 530 Homework 7

Description

Question 1

 

Compute trend percents for the above accounts, using 2015 as the base year.

 

Question 2

 

Express the following comparative income statements in common-size percents.

 

Using the common-size percentages, which item is most responsible for the decline in net income?

 

Question 3

 

Simon Company’s year-end balance sheets follow.

 

(1-a) Compute the current ratio for each of the three years.

 

(1-b) Did the current ratio improve or worsen over the three year period?

 

(2-a) Compute the acid-test ratio for each of the three years.

 

Question 4

 

Simon Company’s year-end balance sheets follow.

 

The company’s income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit:

 

(1-a) Compute days’ sales uncollected.

 

(1-b) For each ratio, determine if it improved or worsened in the current year.

 

Question 5

 

(2-a) Compute accounts receivable turnover.

 

(2-b) For each ratio, determine if it improved or worsened in the current year.

 

Question 6

 

(3-a) Compute inventory turnover.

 

(3-b) For each ratio, determine if it improved or worsened in the current year.

 

Question 7

 

(4-a) Compute days’ sales in inventory.

 

(4-b) For each ratio, determine if it improved or worsened in the current year.

 

Question 8

 

Simon Company’s year-end balance sheets follow.

 

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

 

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

 

(1) Debt and equity ratios.

 

Question 9

 

(2) Debt-to-equity ratio.

 

Question 10

 

(3) Times interest earned.

 

(3-b) Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago?

 

Question 11

 

Simon Company’s year-end balance sheets follow.

 

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

 

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?

 

Question 12

 

(2) Total asset turnover.

 

Question 13

 

(3-a) Return on total assets.

 

(3-b) Based on return on total assets, did Simon’s operating efficiency improve or worsen in the Current Year versus 1 Year Ago?

 

Question 14

 

Simon Company’s year-end balance sheets follow.

 

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

 

Additional information about the company follows.

 

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

 

1. Return on common stockholders’ equity.

 

2. Price-earnings ratio on December 31.

 

2a. Assuming Simon’s competitor has a price-earnings ratio of 6, which company has higher market expectations for future growth?

 

Which company has higher market expectations for future growth?

 

3. Dividend yield.