Exercise 13-9 Analyzing risk and capital structure LO P3

[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	25,531			$	29,548		$	30,164
Accounts receivable, net			73,997				53,260			41,449
Merchandise inventory			93,037				68,330			43,265
Prepaid expenses			8,385				7,911			3,420
Plant assets, net			227,495				210,300			192,602
Total assets		$	428,445			$	369,349		$	310,900
Liabilities and Equity
Accounts payable		$	103,482			$	63,668		$	41,860
Long-term notes payable secured by mortgages on plant assets			81,353				84,950			70,083
Common stock, $10 par value			162,500				162,500			162,500
Retained earnings			81,110				58,231			36,457
Total liabilities and equity		$	428,445			$	369,349		$	310,900

The companys income statements for the Current Year and 1 Year Ago, follow.

For Year Ended December 31	Current Yr						1 Yr Ago
Sales				$	556,979					$	439,525
Cost of goods sold	$	339,757					$	285,691
Other operating expenses		172,663						111,200
Interest expense		9,469						10,109
Income tax expense		7,241						6,593
Total costs and expenses					529,130						413,593
Net income				$	27,849					$	25,932
Earnings per share				$	1.71					$	1.60

For both the Current Year and 1 Year Ago, compute the following ratios:

Exercise 13-9 Part 3

(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?