Exercise 13-9 Analyzing risk and capital structure LO P3 [The following information applies to the questions displayed below. Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 28, 309 83,672 101, 117 8,936 253, 027 $475,061 $ 32,435 $ 33, 118 57,335 43,711 49, 421 8 ,772 3,717 236, 744 207,933 $ 409,535 $ 337,900 $119,473 $ 70,596 $ 45,049 89, 311 162,500 103, 777 $475,061 94,193 73, 929 162,500 162,500 82, 246 56, 422 $ 409,535 $ 337,900 The company's income statements for the Current Year and 1 Year Ago, follow. $ 28, 309 83,672 101, 117 8,936 253, 027 $475, 061 $ 32,435 $ 33, 118 57,335 43, 711 74,249 49,421 8,772 3, 717 236, 744 207, 933 $ 409,535 $ 337,900 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $119,473 $ 70,596 $ 45, 049 89, 311 162,500 103, 777 $475,061 94, 193 73,929 162,500 162,500 82, 246 56, 422 $ 409,535 $ 337,900 The company's income statements for the Current Year and 1 Year Ago, follow. For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Current Yr $617,579 $376, 723 191, 449 10,499 8,029 586,700 1 Yr Ago $ 487, 347 $316, 776 123, 299 11, 209 7,310 458.594 Exercise 13-9 Part 1 (1) Debt and equity ratios. Debt Ratio - Choose Numerator: Total liabilities Choose Denominator: Total assets Debt Ratio Debt ratio 0 % 0 % Current Year: 1 Year Ago: Equity Ratio Choose Numerator: Choose Denominator: Total equity I Total assets - Equity Ratio Equity ratio Current Year: 1 Year Ago: For both the Current Year and 1 Year Ago, compute the following ratios: Exercise 13-9 Part 2 (2) Debt-to-equity ratio. Debt-To-Equity Ratio Choose Numerator: Choose Denominator Debt-To-Equity Ratio Debt-to-equity ratio 0 to 1 0 to 1 Current Year: 1 Year Ago: 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? Complete this question by entering your answers in the tabs below. Required 3A Required 3B Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago? UITSLRTOVers' equity. 2. Price-earnings ratio on December 31. 2a. Assuming Simon's competitor has a price-earnings ratio of 8, which company has higher market expectations for futu 3. Dividend yield. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 AL Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.) Choose Numerator: Price-Earnings Ratio Choose Denominator: Price-Earnings Ratio Price-earnings ratio Current Year: 1 Year Ago: For both the current year ana 1 year ago, compute the following ratios: 1. Return on common stockholders' equity. 2. Price-earnings ratio on December 31 2a. Assuming Simon's competitor has a price-earnings ratio of 8, which company has higher market expectations for future growth? 3. Dividend yield Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2aRequired 3 Compute the dividend yield for each year. (Round your answers to 2 decimal places.) Dividend Yield Choose Denominator: Choose Numerator: Dividend Yield Dividend yield Current Year: 1 Year Ago UITSLRTOVers' equity. 2. Price-earnings ratio on December 31. 2a. Assuming Simon's competitor has a price-earnings ratio of 8, which company has higher market expectations for futu 3. Dividend yield. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2a Required 3 AL Compute the price-earnings ratio for each year. (Round your answers to 2 decimal places.) Choose Numerator: Price-Earnings Ratio Choose Denominator: Price-Earnings Ratio Price-earnings ratio Current Year: 1 Year Ago: For both the current year ana 1 year ago, compute the following ratios: 1. Return on common stockholders' equity. 2. Price-earnings ratio on December 31 2a. Assuming Simon's competitor has a price-earnings ratio of 8, which company has higher market expectations for future growth? 3. Dividend yield Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 2aRequired 3 Compute the dividend yield for each year. (Round your answers to 2 decimal places.) Dividend Yield Choose Denominator: Choose Numerator: Dividend Yield Dividend yield Current Year: 1 Year Ago
