Exercise $13-10($Algo$)$ Analyzing efficiency and profitability LO P$3[$Alternate Version$]$

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$[$The following information applies to the questions displayed below.$]$

Simon Company$$s year$-$end balance sheets follow.

At December $31$ Current Year $1$ Year Ago $2$ Years Ago

Assets

Cash $ $31,000$ $ $35,500$ $ $37,400$

Accounts receivable, net $86,30061,00050,000$

Merchandise inventory $110,50082,80052,500$

Prepaid expenses $10,7509,3004,700$

Plant assets, net $280,000252,500230,000$

Total assets $ $518,550$ $ $441,100$ $ $374,600$

Liabilities and Equity

Accounts payable $ $129,600$ $ $75,500$ $ $50,800$

Long$-$term notes payable $95,00099,25081,200$

Common stock, $$10$ par value $162,500162,500162,500$

Retained earnings $131,450103,85080,100$

Total liabilities and equity $ $518,550$ $ $441,100$ $ $374,600$

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

For Year Ended December $31$ Current Year $1$ Year Ago

Sales $ $765,000$ $ $620,000$

Cost of goods sold $ $459,000$ $ $390,600$

Other operating expenses $237,150155,000$

Interest expense $12,10013,100$

Income tax expense $9,4008,850$

Total costs and expenses $717,650567,550$

Net income $ $47,350$ $ $52,450$

Earnings per share $ $2\mathrm{.}91$ $ $3\mathrm{.}23$

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

Exercise $13-10($Algo$)$ Part $1[$Alternate Version$]$

$(1-$a$)$ Compute profit margin ratio for the current year and one year ago.

$(1-$b$)$ Did profit margin improve or worsen in the Current Year versus $1$ Year Ago?