Exercise 13-9 Risk and capital structure analysis LO P3

[The following information applies to the questions displayed below.] Simon Companys year-end balance sheets follow.

At December 31	2017			2016			2015
Assets
Cash	$	35,866		$	42,339		$	41,534
Accounts receivable, net		102,920			70,461			56,509
Merchandise inventory		130,697			96,948			62,006
Prepaid expenses		11,664			10,896			4,803
Plant assets, net		320,727			298,213			263,248
Total assets	$	601,874		$	518,857		$	428,100
Liabilities and Equity
Accounts payable	$	148,368		$	88,564		$	54,814
Long-term notes payable secured by mortgages on plant assets		115,415			121,724			91,772
Common stock, $10 par value		162,500			162,500			162,500
Retained earnings		175,591			146,069			119,014
Total liabilities and equity	$	601,874		$	518,857		$	428,100

The companys income statements for the years ended December 31, 2017 and 2016, follow.

For Year Ended December 31	2017						2016
Sales				$	782,436					$	617,440
Cost of goods sold	$	477,286					$	401,336
Other operating expenses		242,555						156,212
Interest expense		13,301						14,201
Income taxes		10,172						9,262
Total costs and expenses					743,314						581,011
Net income				$	39,122					$	36,429
Earnings per share				$	2.41					$	2.24

Calculate the companys long-term risk and capital structure positions at the end of 2017 and 2016 by computing the following ratios.

Debt Ratio
	Choose Numerator:	/	Choose Denominator:	=	Debt Ratio
	Total liabilities	/	Total assets	=	Debt ratio
2017:		/	$601,874	=		%
2016:		/	$518,857	=		%
Equity Ratio
	Choose Numerator:	/	Choose Denominator:	=	Equity Ratio
	Total equity	/	Total assets	=	Equity ratio
2017:		/	$601,874	=		%
2016:		/	$518,857	=		%

Debt-To-Equity Ratio
	Choose Numerator:	/	Choose Denominator:	=	Debt-To-Equity Ratio
	Total liabilities	/	Total equity	=	Debt-to-equity ratio
2017:		/		=	0	to 1
2016:		/		=	0	to 1

Times Interest Earned
	Choose Numerator:	/	Choose Denominator:	=	Times Interest Earned
	Income before interest and inc tax	/	Interest expense	=	Times interest earned
2017:		/	$13,301	=		times
2016:		/	$14,201	=		times