Exercise 13-9 (Static) Analyzing risk and capital structure LO P3 [Alternate Version]

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Simon Company's year-end balance sheets follow.

At December 31	Current Year	1 Year Ago	2 Years Ago
Assets
Cash	$ 31,800	$ 35,625	$ 37,800
Accounts receivable, net	89,500	62,500	50,200
Merchandise inventory	112,500	82,500	54,000
Prepaid expenses	10,700	9,375	5,000
Plant assets, net	278,500	255,000	230,500
Total assets	$ 523,000	$ 445,000	$ 377,500
Liabilities and Equity
Accounts payable	$ 129,900	$ 75,250	$ 51,250
Long-term notes payable	98,500	101,500	83,500
Common stock, $10 par value	163,500	163,500	163,500
Retained earnings	131,100	104,750	79,250
Total liabilities and equity	$ 523,000	$ 445,000	$ 377,500

The company's income statements for the current year and one year ago, follow.

For Year Ended December 31	Current Year	1 Year Ago
Sales		$ 673,500		$ 532,000
Cost of goods sold	$ 411,225		$ 345,500
Other operating expenses	209,550		134,980
Interest expense	12,100		13,300
Income tax expense	9,525		8,845
Total costs and expenses		642,400		502,625
Net income		$ 31,100		$ 29,375
Earnings per share		$ 1.90		$ 1.80

Exercise 13-9 (Static) Part 3 [Alternate Version]

(3-a)Compute times interest earned for the current year and one year ago.

(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. Required 3A Required 3B Compute times interest earned for the current year and one year ago. Times Interest Earned Numerator: Denominator: = Times Interest Earned Income before interest expense and income tax expense / Interest expense = Times interest earned Current Year: = 0 times 1 Year Ago: ..... 0 times