Question

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 notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 35,255 101,177 127,211 10,908 311,271 $585,822 $ 40,806 $ 42,085 72,824 57,235 92,494 60,364 10,605 4,770 288,290 260,646 $ 505,019 $ 425,100 $145,870 $ 85,348 $ 54,430 109,033 162,500 168,419 $585,822 113,831 93,947 162,500 162,500 143,340 114,223 $ 505,019 $ 425,100 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 Current Yr $761,569 $464,557 236,086 12,947 9,900 723,490 $ 38,079 $ 2.34 1 Yr Ago $ 600,973 $390,632 152,046 13,822 9,015 565,515 $ 35,458 $ 2.18 Earnings per share For both the Current Year and 1 Year Ago, compute the following ratios:

Answer 1

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Answer 1
Simon Company
Assets	Current Year	1 Year Ago	2 Years Ago
Current Assets
Cash and cash equivalents	35,255.00	40,806.00	42,085.00
Accounts Receivable, net	101,177.00	72,824.00	57,235.00
Merchandise Inventory	127,211.00	92,494.00	60,364.00
Prepaid expenses	10,908.00	10,605.00	4,770.00
Total Current Assets	274,551.00	216,729.00	164,454.00
Plant assets, net	311,271.00	288,290.00	260,646.00
Total Assets	585,822.00	505,019.00	425,100.00
Liabilities
Current Liabilities
Accounts Payable	145,870.00	85,348.00	54,430.00
Total Current Liabilities	145,870.00	85,348.00	54,430.00
Long Term Liabilities
Long Term notes	109,033.00	113,831.00	93,947.00
Total Liabilities	254,903.00	199,179.00	148,377.00
Stockholder's Equity
Common Stock ($ 10 par)	162,500.00	162,500.00	162,500.00
Retained Earnings	168,419.00	143,340.00	114,223.00
Total Stockholder's Equity	330,919.00	305,840.00	276,723.00
Total Liabilities and Equity	585,822.00	505,019.00	425,100.00
Answer 1	Current Year	1 Year Ago	2 Years Ago
Debt Ratio	43.51%	39.44%	34.90%
Total Liabilities/ Total Assets
Answer 2	Current Year	1 Year Ago	2 Years Ago
Debt to Equity Ratio	77.03%	65.13%	53.62%
Total Liabilities/ Total Equity