1. compute the five debt management ratios for 2010 and 2011. round two decimal places.
2. do the ratios suggest that remington is more or less risky for long term creditors at december 31,2011 tjan at december 21, 2010. Explain.
Exercise 12-68 (Algorithmic) Debt Management Ratios Financial statements for Remington Inc. follow. Remington Inc. Consolidated Statements of Income (In thousands except per share amounts) 2009 2011 2010 $ 6,944,296 $ 6,149,218 Net sales $7,245,088 (5,286,253) (4,953,556) (4,355,675) Cost of goods sold Gross income $ 1,958,835 $ 1,990,740 $1,793,543 General and administrative expenses (1,259,896) (1,202,042) (1,080,843) Special and nonrecurring items 2,617 Operating income $701,556 $788,698 $712,700 Interest expense (63,685) (62,398) (63,927) Other income 7,308 10,080 11,529 Gain on sale of investments 9,117 Income before income taxes $645,179 $ 745,497 $ 660,302 Provision for income taxes 254,000 290,000 257,000 Net income $391,179 $ 455,497 $403,302 Net income per share $1.08 $1.25 $1.11 Remington Inc. Consolidated Balance Sheets (In thousands) Dec. 31, Dec. 31, ASSETS 2010 2011 Current assets: $41,235 $ 320,558 Cash and equivalents 837,377 1,056,911 Accounts receivable 803,707 733,700 Inventories 101,811 109,456 Other $2,220,625$1,784,130 Total current assets 1,666,588 1,813,948 Property and equipment, net 248,372 245,342 Other assets $3,846,450 $4,132,555 Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 250,363 $309,092 ACcrued expenses 347,892 274,220 Certificates of deposit 15,700 Income taxes 93,489 137,466 Total current liabilities $707,444 $720,778 Long-term debt $650,000 $ 541,639 Deferred income taxes 275,101 274,844 Other long-term liabilities 61,267 41,572 Total liabilities $1,693,812 $1,578,833 Stockholders' equity: Common and preferred stock $ 189,727 $189,727 Paid-in capital 128,906 127,776 Retained earnings 2,397,112 2,136,794 $2,715,745 $2,454,297 Less: Treasury stock, at cost (277,002) (186,680) Total stockholders' equity 2,438,743 $2,267,617 Total liabilities and stockholders $3,846,450 4,132,555 equity Using Remington's financial statements as shown above, respond to the following requirements. 1. Compute the five debt-management ratios for 2010 and 2011. Round your answers to two decimal places. 2010 2011 Times interest earned Debt-to-equity ratio Debt-to-total-assets ratio Long-term-debt-to-equity ratio Long-term-debt-to-total-assets ratio 2. Conceptual Connection: Indicate whether the ratios have changed significantly from 2010 to 2011 Select Do the ratios suggest that Remington is more or less risky for long-term creditors at December 31, 2011 than at December 31, 2010? Explain. The input in the box below will not be graded, but may be reviewed and considered by your instructor. blank
