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Exercise 13-11 Analyzing profitability LO P3 Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities 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 Current Yr 1 Yr Ago 2 Yrs Ago $ 37,800 $ 31,800 89, 500 112,500 10, 700 278, 500 $ 35,625 62,500 82,500 9, 375 255,000 50, 200 54,000 5,000 230, 500 $ 377,500 $ 523,000 $ 445,000 $ 129,900 $ 75,250 $ 51,250 98,500 101, 500 83, 500 163, 500 163, 500 163, 500 131, 100 104, 750 79, 250 $ 523,000 $ 445,000 $ 377,500 The company's income statements for the current year and 1 year ago, follow. Current Yr For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share 1 Yr Ago $ 673, 500 $ 532,000 $ 411,225 209, 550 12, 100 9, 525 $ 345, 500 134, 980 13,300 8,845 642, 400 $ 31,100 502,625 $ 29, 375 $ 1.90 $ 1.80 Additional information about the company follows. Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago $ 30.00 28.00 0.29 0.24 Exercise 13-11 Analyzing profitability LO P3 Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities 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 Current Yr 1 Yr Ago 2 Yrs Ago $ 37,800 $ 31,800 89, 500 112,500 10, 700 278, 500 $ 35,625 62,500 82,500 9, 375 255,000 50, 200 54,000 5,000 230, 500 $ 377,500 $ 523,000 $ 445,000 $ 129,900 $ 75,250 $ 51,250 98,500 101, 500 83, 500 163, 500 163, 500 163, 500 131, 100 104, 750 79, 250 $ 523,000 $ 445,000 $ 377,500 The company's income statements for the current year and 1 year ago, follow. Current Yr For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share 1 Yr Ago $ 673, 500 $ 532,000 $ 411,225 209, 550 12, 100 9, 525 $ 345, 500 134, 980 13,300 8,845 642, 400 $ 31,100 502,625 $ 29, 375 $ 1.90 $ 1.80 Additional information about the company follows. Common stock market price, December 31, Current Year Common stock market price, December 31, 1 Year Ago Annual cash dividends per share in Current Year Annual cash dividends per share 1 Year Ago $ 30.00 28.00 0.29 0.24 Current Year: 1 Year Ago: Choose Numerator: Price-Earnings Ratio Choose Denominator: = Price-Earnings Ratio = Price-earnings ratio = = < Required 1 Required 2a > Assuming Simon's competitor has a price-earnings ratio of 10, which company has higher market expectations for future growth? Which company has higher market expectations for future growth? Required 1 Required 2 Required 2a Required 3 Compute the dividend yield for each year. (Round your answers to 2 decimal places.) Current Year: 1 Year Ago: Choose Numerator: Dividend Yield Choose Denominator: = Dividend Yield 1 = Dividend yield 1 = % 1 = %

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