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		$ 659,419		$ 520,363
Cost of goods sold	$ 402,246		$ 338,236
Other operating expenses	204,420		131,652
Interest expense	11,210		11,968
Income tax expense	8,572		7,805
Total costs and expenses		626,448		489,661
Net income		$ 32,971		$ 30,702
Earnings per share		$ 2.03		$ 1.89

(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)

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[The following information applies to the questions displayed below.]

Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 29,030	$ 34,982	$ 36,436
Accounts receivable, net	89,341	62,444	49,063
Merchandise inventory	107,967	83,324	50,710
Prepaid expenses	9,734	9,091	3,928
Plant assets, net	271,173	247,439	224,263
Total assets	$ 507,245	$ 437,280	$ 364,400
Liabilities and Equity
Accounts payable	$ 122,515	$ 73,900	$ 47,620
Long-term notes payable	93,455	98,563	81,338
Common stock, $10 par value	163,500	163,500	162,500
Retained earnings	127,775	101,317	72,942
Total liabilities and equity	$ 507,245	$ 437,280	$ 364,400

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

(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 Complete this question by entering your answers in the tabs below. Compute debt-to-equity ratio for the current year and one year ago. (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? Complete this question by entering your answers in the tabs below. Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago? Based on times interest earned, the company is for creditors in the current year versus one year ago. (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? Complete this question by entering your answers in the tabs below. Compute debt and equity ratio for the current year and one year ago. Exercise 17-9 (Algo) Analyzing risk and capital structure LO P3 The company's income statements for the current year and one year ago, follow. (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? (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? Complete this question by entering your answers in the tabs below. Based on debt-to-equity ratio, does the company have more or less debt in the current year versus one year ago? Based on debt-to-equity ratio, the company has debt in the current year versus one year ago. Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. For both the current year and one year ago, compute the following ratios: (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? Complete this question by entering your answers in the tabs below. Compute times interest earned for the current year and one year ago