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 $ 34,581 101,218 121,024 10,805 312,685 $ 580,313 $ 40,422 70,738 90,699 10,506 287,905 $ 500,270 $ 42,957 57, 276 60,407 4,726 260,034 $ 425,400 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 $ 144,498 108,008 163,500 164, 307 $ 580,313 $ 86,237 113,911 163,500 136,622 $ 500,270 $ 57,837 93,073 162,500 111,990 $ 425,400 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 $ 754,407 $ 460,188 233,866 12,825 9,807 716,686 $ 37,721 1 Year Ago $ 595,321 $ 386,959 150,616 13,692 8,930 560,197 $ 35,124 $ 2.16 $ 2.32 For both the current year and one year ago, compute the following ratios: (1) Debt and equity ratios. (2) Debt-to-equity ratio. (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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3A Required 3B Compute debt and equity ratio for the current year and one year ago. Debt Ratio 1 Numerator: Denominator: Il 1 II Debt Ratio Debt ratio 0 % 0 % / II Current Year: 1 Year Ago: = Numerator: Equity Ratio 1 1 Denominator: = = = Equity Ratio Equity ratio 0 % 0 % / Current Year: Year Ago: 1 Required 1 Required 2 Required 3A Required 3B Compute debt-to-equity ratio for the current year and one year ago. Numerator: Debt-To-Equity Ratio 1 Denominator: 1 = = Debt-To-Equity Ratio Debt-to-equity ratio 0 to 1 0 to 1 1 = Current Year: 1 Year Ago: 1 = Required 1 Required 2 Required 3A Required 3B Compute times interest earned for the current year and one year ago. Times Interest Earned Numerator: 1 Denominator: Times Interest Earned 1 = Times interest earned Current Year: 1 0 times 1 Year Ago: 1 0 times Required 1 Required 2 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
