Question

Required information [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 notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 26,752 81,533 103,517 8,615 247,036 $467,453 $ 31,593 $ 33,588 57,545 45,241 73,060 49,652 8,632 3,770 213,949 $ 402,977 $ 346,200 $ 114,068 $ 67,422 $ 46,612 87,002 162,500 103,883 $467,453 89,904 78,040 162,500 162,500 83,151 59,048 $ 402,977 $ 346,200 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 $ 607,689 $370,690 188,384 10,331 7,909 577,305 $ 30,384 $ 1.87 1 Yr Ago $ 479,543 $311,703 121,324 11,029 7,193 451,249 $ 28,294 $ 1.74 For both the Current Year and 1 Year Ago, compute the following ratios:

Answer 1

Debt Ratio
	Total liabilities	/	Total Assets	=	Debt Ratio
Current year	$201,070	/	$467,453	=	43.01%
1 year ago	157,326	/	402,977	=	39.04%
Equity Ratio
	Total Equity	/	Total Assets	=	Equity Ratio
Current year	$266,383	/	$467,453	=	56.99%
1 year ago	245,651	/	402,977	=	60.96%
Debt to Equity Ratio
	Total liabilities	/	Total Equity	=	Debt to Equity Ratio
Current year	$201,070	/	$266,383	=	0.75 to 1
1 year ago	157,326	/	245,651	=	0.64 to 1
Times Interest Earned
	Earnings before interest and tax	/	Interest Expense	=	Times Interest Earned
Current year	$48,615	/	$10,331	=	4.7 Times
1 year ago	$46,516	/	11,029	=	4.2 Times