AGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy's The Almanac of Business and Industrial Financial Ratios. Following are the 2018 and 2017 comparative income statements and balance sheets for AGF. (The financial data we use are from actual financial statements of a well-known corporation, but the company name is fictitious and the numbers and dates have been modified slightly to disguise the company's identity.)

Long-term solvency refers to a company's ability to pay its long-term obligations. Financing ratios provide investors and creditors with an indication of this element of risk.
Required:
1. Calculate the debt to equity ratio for AGF for 2018. The average ratio for the stocks listed on the New York Stock Exchange in a comparable time period was 1.0. What information does your calculation provide an investor?
2. Is AGF experiencing favorable or unfavorable financial leverage?
3. Calculate AGF's times interest earned ratio for 2018. The coverage for the stocks listed on the New York Stock Exchange in a comparable time period was 5.1. What does your calculation indicate about AGF's risk?

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AGF FOODS COMPANY Years Ended December 31, 2018 and 2017 ($ in millions) omparative Income Statements 2018 $6,440 (3,667) 2.773 (1,916) 857 2017 $5,800 (3,389) 2,411 1,629) 782 (53) 729 (287) $442 Net sales Gross profit Operating income Income from operations before tax Cost of goods sold Operating expenses Interest expense (54) 803 (316) $ 487 Income taxes Net income Comparative Balance Sheets Assets Total current assets Property, plant, and equipment (net) Intangibles (net) Other assets $1,879 2,592 800 74 $5,345 $1,490 2,291 843 60 $4,684 Total assets Liabilities and Shareholders' Equity Total current liabilities Long-term debt Deferred income taxes $1,473 534 407 2,414 $ 941 728 344 2,013 Total liabilities Shareholders' equity Common stock Additional paid-in capital Retained earnings Total shareholders' equity 180 21 2.730 2,931 $5,345 180 63 2,428 2,67 1 $4,684 Total liabilities and shareholders' equity