Question

Simon Company’s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 31,800 $ 36,500 $ 37,200 Accounts receivable, net 87,900 64,000 50,000 Merchandise inventory 110,500 80,000 54,000 Prepaid expenses 10,500 9,250 4,600 Plant assets, net 277,000 254,000 232,000 Total assets $ 517,700 $ 443,750 $ 377,800 Liabilities and Equity Accounts payable $ 129,200 $ 74,750 $ 50,600 Long-term notes payable secured by mortgages on plant assets 96,500 100,500 80,200 Common stock, $10 par value 161,500 161,500 161,500 Retained earnings 130,500 107,000 85,500 Total liabilities and equity $ 517,700 $ 443,750 $ 377,800 The company’s income statements for the years ended December 31, 2017 and 2016, follow. For Year Ended December 31 2017 2016 Sales $ 735,000 $ 620,000 Cost of goods sold $ 441,000 $ 384,400 Other operating expenses 220,500 155,000 Interest expense 11,700 13,100 Income taxes 9,400 8,825 Total costs and expenses 682,600 561,325 Net income $ 52,400 $ 58,675 Earnings per share $ 3.24 $ 3.63 Evaluate the company's efficiency and profitability by computing the following for 2017 and 2016. (2) Total asset turnover

Answer 1

Asset Turnover =Net Sales / Average Total Assets
	2017	2016	2015
Net Sales	$735,000	$620,000	N.A
Total Asset	$517,700	$443,750	$377,800
Average Total Asset
[($517,700+$443,750)/2]	$480,725		N.A
[($443,750+$337,800)/2]		$390,775	N.A
Asset Turnover	1.42	1.59