Question 3

1. Table 12-5 The following are the income statements and balance sheets for Amazon Pools and Spas at and for the years ended December 31, 2X10, 2X09, and 2X08: Amazon Pools and Spas Combined Statements of Income For the Years Ended December 31, 2X10, 2X09, and 2X08 2X10 2X09 2X08 Sales (all credit sales) $800 $740 $675 Less Cost of Goods Sold 525 490 450 Gross Profit $275 $250 $225 Less Operating Expenses 150 140 125 Operating Income $125 $110 $100 Less Other Expense: Interest 10 8 5 Income before Tax $115 $102 $ 95 Less Income Tax Expense 51 46 43 Net Income $ 64 $ 56 $ 52 Amazon Pools and Spas Consolidated Balance Sheets December 31, 2X10, 2X09, and 2X08 2X10 2X09 2X08 Current Assets: Cash $ 25 $ 20 $ 15 Accts Receivable 90 70 60 Inventory 65 50 40 Prepaid Rent 10 15 5 Total Current Assets $190 $155 $120 Long-Term Assets: Equipment $160 $155 $140 Accumulated Depreciation (100) (95) (85) Total Long-Term Assets $ 60 $ 60 $ 55 Total Assets $250 $215 $175 Current Liabilities: Accounts Payable $ 50 $ 30 $ 20 Wages Payable 20 10 5 Taxes Payable 10 5 15 Current Long-Term Debt 10 15 5 Total Current Liabilities $ 90 $ 60 $ 45 Long-Term Liabilities: Long-Term Debt 35 45 40 Total Liabilities $125 $105 $ 85 Stockholders' Equity: Common Stock $5 par $ 50 $ 50 $ 50 Retained Earnings 75 60 40 Total Stockholders' Equity $125 $110 $ 90 Total Liab. & Stk. Equity $250 $215 $175 December 31 market price $ 50 $ 47 $ 45 per share Referring to Table 12-5, what is the total-debt-to-total-equity ratio for Amazon Pools and Spas in 2X10? Has the total-debt-to-total equity ratio improved or not improved since 2X09?

   		0.36, not improved
   		0.36, improved
   		1.00, improved
   		0.28, improved
   		1.00, not improved