Chapter 13 EX 1 #3

[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	$ 27,636	$ 31,037	$ 33,640
Accounts receivable, net	76,956	54,315	42,240
Merchandise inventory	95,771	73,970	45,440
Prepaid expenses	8,463	8,147	3,665
Plant assets, net	250,395	228,411	204,915
Total assets	$ 459,221	$ 395,880	$ 329,900
Liabilities and Equity
Accounts payable	$ 112,059	$ 66,235	$ 44,853
Long-term notes payable	86,334	91,052	70,721
Common stock, $10 par value	162,500	163,500	162,500
Retained earnings	98,328	75,093	51,826
Total liabilities and equity	$ 459,221	$ 395,880	$ 329,900

For both the current year and one year ago, compute the following ratios:

The companys income statements for the current year and one year ago, follow.

For Year Ended December 31	Current Year		1 Year Ago
Sales		$ 596,987		$ 471,097
Cost of goods sold	$ 364,162		$ 306,213
Other operating expenses	185,066		119,188
Interest expense	10,149		10,835
Income tax expense	7,761		7,066
Total costs and expenses		567,138		443,302
Net income		$ 29,849		$ 27,795
Earnings per share		$ 1.84		$ 1.71

(1) Debt and equity ratios. (2-a) Compute debt-to-equity ratio for the current year and one year ago. (2-b) Based on debt-to-equity ratio, does the company have more or less debt in the current year versus one year ago? (3-a) Times interest earned. (3-b) Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago?