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Exercise 13-9 Analyzing risk and capital structure LO P3

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

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	26,804			$	31,015		$	31,357
Accounts receivable, net			80,040				57,045			41,809
Merchandise inventory			98,662				71,722			46,353
Prepaid expenses			8,719				8,224			3,626
Plant assets, net			244,668				227,591			200,055
Total assets		$	458,893			$	395,597		$	323,200
Liabilities and Equity
Accounts payable		$	116,550			$	66,856		$	42,662
Long-term notes payable secured by mortgages on plant assets			86,272				88,258			71,427
Common stock, $10 par value			162,500				162,500			162,500
Retained earnings			93,571				77,983			46,611
Total liabilities and equity		$	458,893			$	395,597		$	323,200

The companys income statements for the Current Year and 1 Year Ago, follow.

For Year Ended December 31	Current Yr						1 Yr Ago
Sales				$	596,561					$	470,760
Cost of goods sold	$	363,902					$	305,994
Other operating expenses		184,934						119,102
Interest expense		10,142						10,827
Income tax expense		7,755						7,061
Total costs and expenses					566,733						442,984
Net income				$	29,828					$	27,776
Earnings per share				$	1.84					$	1.71

For both the Current Year and 1 Year Ago, compute the following ratios:

Exercise 13-9 Part 3

(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?

Complete this question by entering your answers in the tabs below. Required 3A Required 3B Times interest earned. Choose Numerator: = Times Interest Earned 1 Choose Denominator: 1 1 1 Times Interest Earned Times interest earned times 11 Current Year: 1 Year Ago: II times Complete this question by entering your answers in the tabs below. Required 3A Required 3B Based on times interest earned, is the company more or less risky for creditors in the Current Year versus 1 Year Ago? Times interest earned