Exercise 17-9 (Algo) Analyzing risk and capital structure LO P3
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. Current Year 1 Year Ago 2 Years 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 Common stock, $10 par value Retained earnings Total liabilities and equity $ 31,008 90,798 114,161 10,192 295,658 $ 541,817 $ 37,740 66,046 84,682 9,515 269,101 $ 467, 084 $ 36,664 48,885 53,125 4,240 234,986 $ 377,900 $ 134,912 101,862 162,500 142,543 $ 541,817 $ 78,148 105,281 163,500 120,155 $ 467, 084 $ 50,382 85,186 163,500 78,832 $ 377,900 For both the current year and one year ago, compute the following ratios: 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. For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Year $ 704,362 $ 429,661 218,352 11,974 9,157 669, 144 $ 35,218 $ 2.17 1 Year Ago $ 555,830 $361,290 140,625 12,784 8,337 523,036 $ 32,794 $ 2.02 (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? Required 1 Required 2A Required 2B Required 3A Required 3B Compute debt and equity ratio for the current year and one year ago. Numerator: Debt Ratio 1 1 Denominator: 11 Debt Ratio Debt ratio 0 % 0 % 11 Current Year: 1 Year Ago: = 1 Equity Ratio 1 Numerator: Denominator: = / = Equity Ratio Equity ratio 0 % 0 % 11 Current Year: 1 Year Ago: 11 Required 1 Required 2A Required 2B Required 3A Required 3B Compute debt-to-equity ratio for the current year and one year ago. Numerator: Debt-To-Equity Ratio 1 Denominator: / = 11 Debt-To-Equity Ratio Debt-to-equity ratio 0 to 1 0 to 1 Current Year: 1 Year Ago: II Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3A Required 3B 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 1 Required 2A Required 2B Required 3A Required 3B Compute times interest earned for the current year and one year ago. Times Interest Earned Numerator: 1 Denominator: Il 1 11 Times Interest Earned Times interest earned 0 times 0 times Current Year: 1 1 Year Ago: 11 Required 1 Required 2A Required 2B 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? Based on times interest earned, the company is for creditors in the current year versus one year ago
