Required information Exercise 13-9 Analyzing risk and capital structure LO P3 [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs 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 not payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 28,688 86,506 102,429 9, 145 264,379 $491, 147 $ 34,888 $ 35,636 61,055 46, 104 76,763 51,621 8,714 3,999 241,983 219,040 $ 423,403 $ 356,400 $119,850 $ 72,271 $ 46,574 91,412 162,500 117,385 $491, 147 96,409 77, 189 162,500 162,500 92,223 70,137 $ 423,403 $ 356,400 The company's income statements for the Current Year and 1 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 Yr $638,491 $389,480 197,932 10,854 8,300 606,566 $ 31,925 1 Yr Ago $ 503,850 $327,503 127,474 11,589 7,558 474, 124 $ 29,726 $ 1.96 $ 1.83 For both the Current Year and 1 Year Ago, compute the following ratios: Exercise 13-9 Part 1 (1) Debt and equity ratios. Debt Ratio 1 Choose Denominator: P Debt Ratio Choose Numerator: Total liabilities / Total assets Debt ratio 100.0 % Current Year: 1 Year Ago: 100.0 % 491,147 / $ 491,147 = $ 423,4031 $ 423,403 = Equity Ratio Choose Numerator: / Choose Denominator: Total equity / Total assets Equity Ratio Equity ratio = Current Year: / = 0 % 1 Year Ago: 1 11 0 % Exercise 13-9 Part 2 (2) Debt-to-equity ratio. Debt-To-Equity Ratio Choose Numerator: 1 Choose Denominator: II Total liabilities | Total equity II Debt-To-Equity Ratio Debt-to-equity ratio oto 1 Current Year: / II 1 Year Ago: 1 = 0 to 1 Exercise 13-9 Part 3 (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. Required 3A Required 3B Times interest earned. Times Interest Earned Choose Numerator: | Choose Denominator: Times Interest Earned Times interest earned times Current Year: II 1 Year Ago: = times Required 3A Required 3B Exercise 13-9 Part 3 (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. 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? Times interest earned
