EXERCISE 1-5 Page 50 Evaluating Risk and Capital Structure Refer to the information in Exercise 1-3 about Mixon Company. The company's income statements for the years ended December 31, 2006 and 2005 show the following: 2005 2006 $672,500 $530,000 Sales $344,500 Cost of goods sold $410,225 0ther operating expenses 208,550 133,980 12,300 Interest expense 11,100 7,845 Income taxes 8,525 (498,625) Total costs and expenses (638,400) 31,375 Net income 34,100 1.93 Earnings per share 2.10