Required information

Use the following information for the Exercises below. (Algo)

Skip to question

[The following information applies to the questions displayed below.]

Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 32,049	$ 38,235	$ 41,023
Accounts receivable, net	93,845	68,938	54,697
Merchandise inventory	122,808	89,311	58,840
Prepaid expenses	10,853	10,138	4,337
Plant assets, net	300,447	276,138	243,403
Total assets	$ 560,002	$ 482,760	$ 402,300
Liabilities and Equity
Accounts payable	$ 138,046	$ 81,586	$ 51,510
Long-term notes payable	103,175	111,035	88,908
Common stock, $10 par value	163,500	162,500	163,500
Retained earnings	155,281	127,639	98,382
Total liabilities and equity	$ 560,002	$ 482,760	$ 402,300

For both the current year and one year ago, compute the following ratios:

Exercise 17-9 (Algo) Analyzing risk and capital structure LO P3

The companys income statements for the current year and one year ago, follow.

For Year Ended December 31	Current Year	1 Year Ago
Sales		$ 728,003		$ 574,484
Cost of goods sold	$ 444,082		$ 373,415
Other operating expenses	225,681		145,344
Interest expense	12,376		13,213
Income tax expense	9,464		8,617
Total costs and expenses		691,603		540,589
Net income		$ 36,400		$ 33,895
Earnings per share		$ 2.24		$ 2.09

(1) Debt and equity ratios.

(2-a) Compute debt-to-equity ratio for the current year and one year ago.

(2-b) Based on debt-to-equity ratio, does the company have more or less debt in the current year versus one year ago?

(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?