Required information Skip to question [The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow. At December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash $ 31,800 $ 35,625 $ 37,800 Accounts receivable, net 89,500 62,500 50,200 Merchandise inventory 112,500 82,500 54,000 Prepaid expenses 10,700 9,375 5,000 Plant assets, net 278,500 255,000 230,500 Total assets $ 523,000 $ 445,000 $ 377,500 Liabilities and Equity Accounts payable $ 129,900 $ 75,250 $ 51,250 Long-term notes payable 98,500 101,500 83,500 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 131,100 104,750 79,250 Total liabilities and equity $ 523,000 $ 445,000 $ 377,500 The companys income statements for the current year and one year ago, follow. For Year Ended December 31 Current Year 1 Year Ago Sales $ 673,500 $ 532,000 Cost of goods sold $ 411,225 $ 345,500 Other operating expenses 209,550 134,980 Interest expense 12,100 13,300 Income tax expense 9,525 8,845 Total costs and expenses 642,400 502,625 Net income $ 31,100 $ 29,375 Earnings per share $ 1.90 $ 1.80 (3-a) Compute times interest earned for the current year and one year ago. (3-b) Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago?

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Required 3A

Required 3B

Compute times interest earned for the current year and one year ago.

Times Interest Earned
	Numerator:	/	Denominator:	=	Times Interest Earned
	Income before interest expense and income tax expense	/	Interest expense	=	Times interest earned
Current Year:		/		=	0	times
1 Year Ago:		/		=	0	times