kequirea information Exercise 13-8 Liquidity analysis and interpretation LO P3 The following information applies to the questions displayed below] Simon Company's year-end balance sheets follow At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net $25,396 $ 29,685 $ 30,922 89,90063,000 57,000 110,50084,000 60,000 8,1787,7923,436 200-820 190-332 164, 142 434,784 $374,814 $ 315,500 Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by 107,279 $ 62,71041,230 mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 80,922 85,34569,028 62,500 162,500 162,50 84,18364,25942,742 434,784 $374,814 $315,500 The companys income statements for the years ended December 31, 2017 and 2016, follow Assume that all sales are on credit: For Year Ended December 3 $ 446,029 565,219 Sales Cost of goods sold Other operating expenses Interest expense Income taxes 344,784 175,218 9,609 7,348 289,919 12,845 10,259 6,690 419 713 Total costs and expenses Net income 536, 959 s 28,260 s 26,316 1.74 1.62 Earnings per share Exercise 13-8 Part 4 (4) Compute days' sales in inventory Ch Numerator x DaysDays' Sales in Days' sales in inventory 2017: 2016: days At Assets 2017 2016 Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets 30,202 33,905 36,046 85,801 61,780 49,022 110,057 80,022 53,253 9,726 9,359 3,965 271,041 251,854 221,814 $506, 827 $436,920 $364,100 Liabilities and Equity Accounts payable Long-term notes payable secured by $126,200 73,101 47,100 mortgages on plant assets Common stock, $10 par value 98,142 101,497 78,857 162,500 162,500 162,500 119,985 99,822 75,643 Total liabilities and equity $506, 827 $436,920 $364,100 The company's income statements for the years ended December 31, 2017 and 2016, follow. For Year Ended December-31 2017 2016 Sales Cost of goods sold Other operating expenses Interest expense Income taxes $658,875 $519,935 $401,91 204,251 11,201 8,565 337,958 131,544 11,959 7,799 Total costs and expenses Net income 625,931 32,944 $ 2.03 489,260 30,675 $1.89 Earnings per share Calculate the company's long-term risk and capital structure positions at the end of 2017 and 2016 by computing the following ratios. Exercise 13-9 Part 1 (1) Debt and equity ratios. Debt Ratio -Debt ratio 2017 2016 Equity Ratio Choose Equity Equity ratio Simon Company's year-end balance sheets follow. At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net s 30,202 33,905 36,046 85,80161,780 49,022 110,057 80,022 53,253 9,7269,359 3,965 271,041 251,854 221,814 $506,827 $436,920 $364,100 Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by $126,200 73,101 47,100 mortgages on plant assets Common stock, $10 par value Retained earnings 98,142 101,497 78, 857 162,500 162,500 162,500 119,985 99,822 75,643 $506,827 $436,920 $364,100 Total liabilities and equity The company's income statements for the years ended December 31,2017 and 2016, follow. For Year Ended December 3120172016 Sales Cost of goods sold Other operating expenses Interest expense Income taxes $658, 875 $519,935 $337,958 131,544 11,959 7,799 $401,91 204,251 11,201 8,565 Total costs and expenses Net income 625,931 32,944 489,260 $30,675 $ 1.89 S 2.03 Earnings per share Calculate the company's long-term risk and capital structure positions at the end of 2017 and 2016 by computing the following ratios Exercise 13-9 Part 2 (2) Debt-to-equity ratio. Debt-To-Equity Choose Numerator: | 1 | Choose Denominator: I = Debt-to-equity ratio 2017 to 1 2016 to 1