Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 30,650 $ 35,827 $ 36,947 Accounts receivable, net 89,000 62,100 50,700 Merchandise inventory 113,500 84,000 58,000 Prepaid expenses 9,870 9,405 4,105 Plant assets, net 276,474 256,508 223,448 Total assets $ 519,494 $ 447,840 $ 373,200 Liabilities and Equity Accounts payable $ 129,354 $ 75,685 $ 49,262 Long-term notes payable 97,665 103,003 82,477 Common stock, $10 par value 162,500 162,500 162,500 Retained earnings 129,975 106,652 78,961 Total liabilities and equity $ 519,494 $ 447,840 $ 373,200 The company’s income statements for the current year and one year ago follow. Assume that all sales are on credit: For Year Ended December 31 Current Yr 1 Yr Ago Sales $ 675,342 $ 532,930 Cost of goods sold $ 411,959 $ 346,405 Other operating expenses 209,356 134,831 Interest expense 11,481 12,257 Income tax expense 8,779 7,994 Total costs and expenses 641,575 501,487 Net income $ 33,767 $ 31,443 Earnings per share $ 2.08 $ 1.93 Exercise 13-9 (Algo) Part 4

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 5PEA

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Simon Company’s year-end balance sheets follow.

At December 31	Current Yr	1 Yr Ago	2 Yrs Ago
Assets
Cash		$	30,650	$	35,827	$	36,947
Accounts receivable, net			89,000		62,100		50,700
Merchandise inventory			113,500		84,000		58,000
Prepaid expenses			9,870		9,405		4,105
Plant assets, net			276,474		256,508		223,448
Total assets		$	519,494	$	447,840	$	373,200
Liabilities and Equity
Accounts payable		$	129,354	$	75,685	$	49,262
Long-term notes payable			97,665		103,003		82,477
Common stock, $10 par value			162,500		162,500		162,500
Retained earnings			129,975		106,652		78,961
Total liabilities and equity		$	519,494	$	447,840	$	373,200

The company’s income statements for the current year and one year ago follow. Assume that all sales are on credit:

For Year Ended December 31	Current Yr	1 Yr Ago
Sales			$	675,342			$	532,930
Cost of goods sold	$	411,959			$	346,405
Other operating expenses		209,356				134,831
Interest expense		11,481				12,257
Income tax expense		8,779				7,994
Total costs and expenses				641,575				501,487
Net income			$	33,767			$	31,443
Earnings per share			$	2.08			$	1.93

Exercise 13-9 (Algo) Part 4

(4-a) Compute days' sales in inventory.
(4-b) For each ratio, determine if it improved or worsened in the current year.

Required 4A
Required 4B
Compute days' sales in inventory.
Days' Sales In Inventory.
Choose Numerator:
Choose Denominator:
Days
Days' Sales In Inventory
X
Days' sales in inventory
Current Yr:
days
1 Yr Ago:
days
X

Required 4A
Required 4B
For each ratio, determine if it improved or worsened in the current year.
Days' sales in inventory

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