Exercise 12-79 Debt Management Ratios Financial statements for Steele Inc. follow. Steele Inc. Consolidated Income Statements (in thousands except per share amounts) 2019 2018 2017 Net sales $7,245,088 $6,944,296 $6,149,218 Cost of goods sold (5,286,253) (4,953,556) (4,355,675) Gross margin $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 0 0 Operating income $701,556 $788,698 $712,700 Interest expense (63,685) (62,398) (63,927) income 7,30 10,080 11,529 Gain on sale of investments 0 9,117 0 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 Steele Inc. Consolidated Balance Sheets (in thousands) ASSETS Dec. 31, 2019 Dec. 31, 2018 Current assets: Cash and equivalents $41,235 $320,558 1,056,911 Accounts receivable 837,377 Inventories 733,700 803,707 Other 109,456 101,811 Total current assets $2,220,625 $1,784,130 Property and equipment, net 1,666,588 1,813,948 Other assets 247,892 248,372 Total assets $4,135,105 $3,846,450 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $250,363 $309,092 Accrued expenses 347,892 274,220 Other current liabilities 15,700 0 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: Preferred stock $100,000 $100,000 Common stock 89,727 89,727 Additional paid-in capital-common stock 128,906 127,776 Retained earnings 2,397,112 2,136,794 $2,715,745 $2,454,297 Less: Treasury stock, at cost (274,452) (186,680) Total stockholders' equity $2,441,293 $2,267,617 Total liabilities and stockholders' equity $4,135,105 $3,846,450 Required: 1. Compute the five debt management ratios for 2018 and 2019. Round your answers to two decimal places. 2019 2018 Times interest earned 11.02 12.64 Debt to equity ratio 0.69 0.70 Debt to total assets ratio 0.41 0.41 Long-term debt to equity ratio 0.40 X 0.38 Long-term debt to total assets ratio 0.24 0.22 X