Exercise 17-9 (Algo) Analyzing risk and capital structure LO P3

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

For Year Ended December 31	Current Year		1 Year Ago
Sales		$ 544,870		$ 429,971
Cost of goods sold	$ 332,371		$ 279,481
Other operating expenses	168,910		108,783
Interest expense	9,263		9,889
Income tax expense	7,083		6,450
Total costs and expenses		517,627		404,603
Net income		$ 27,243		$ 25,368
Earnings per share		$ 1.68		$ 1.56

(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?

Use the following information for the Exercises below. (Algo)

Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 24,481	$ 29,484	$ 30,405
Accounts receivable, net	71,671	51,091	38,950
Merchandise inventory	91,014	66,176	42,756
Prepaid expenses	8,202	7,360	3,312
Plant assets, net	223,763	207,209	185,677
Total assets	$ 419,131	$ 361,320	$ 301,100
Liabilities and Equity
Accounts payable	$ 102,276	$ 59,231	$ 40,143
Long-term notes payable	78,009	83,104	65,212
Common stock, $10 par value	163,500	163,500	162,500
Retained earnings	75,346	55,485	33,245
Total liabilities and equity	$ 419,131	$ 361,320	$ 301,100

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