Question

Simon Company's year-end balance sheets follow At December 31 Assets 2017 2016 2015 as Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets $ 31,200 34,200 $ 36,700 52,800 54,200 4,305 291,369 278,627 231,995 $525,000 $470,000 $ 380,000 64,300 103,556 83,200 9,673 88,700 10,175 Liabilities and Equity Accounts payable $133,340 81,019 $ 48,655 Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 83,980 162,500 162,500162,500 84,865 $525,000 $470,000 $ 380,000 98,700 104, 857 130,460 121,624 The company's income statements for the years ended December 31, 2017 and 2016, follow For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income taxes Total costs and expenses Net income 2017 2016 $682,500 $ 559,300 $416, 325 211,575 11,603 8,873 $363,545 141, 503 12,864 8,390 648,376 $34,124 $ 2.10 526,302 $ 32,998 $ 2.03 Earnings per share Additional information about the company follows Common stock market price, December 31, 2017 Common stock market price, December 31, 2016 Annual cash dividends per share in 2017 Annual cash dividends per share in 2016 $ 33.00 31.00 0.26 To help evaluate the company's profitability, compute the following ratios for 2017 and 2016 1. Return on common stockholders' equity. Required1 Compute the return on common stockholders' equity for each year. ommon Stockholders' Equity Return On Common Stockholders' Equit Return on common Choose Numerator: Choose Denominator: referred stockholders Average common Net incomedividends stockholders 2017 $ 34,124 2016 $ 32,998-

Answer 1

Return on common Stockholder's equity

Return on Common Stockholder's equity
	Choose numerator			/	Choose denominator	=	Return on Common Stockholder's equity
	Net income	-	Preferred dividend	/	Average common Stockholder's equity	=	Return on Common Stockholder's equtiy
2017	34124	-	0	/	288542	=	11.83%
2016	32990	-	0	/	265744.50	=	12.41%