Simon Company\'s year-end balance sheets toliow At Decenber 31 20172916 2015 Cas

Question

Simon Company's year-end balance sheets toliow At Decenber 31 20172916 2015 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-tern notes payable secured by $ 35,611 41,626 42,985 186, 340 72,118 58,381 135,814 96,261 6,975 11,700 11,148 4,676 321,015 384,441 263,283 $609,689 %525,586 $429.48e $156, 365 98,681 $ 57,248 Tortgages on plant assets Connon stock, $18 par value Retained earnings Total 114,628 117,2587,744 162,see 162,500 162 ,5?? 176,195 155,227 111,908 $689,688 1525,586 $429,408 1iabilities and equity The company's income statements for the y oars ended December 31, 2017 and 2016,folow. 2017 For Year Ended Decenber 31 Sales Cost of goods sold Dther operating expenses Interest expense Incone taxes Total costs and expenses $792,584 $625,447 $483,476 245, 781 13,474 406,541 158, 238 14, 385 , 382 Net incane dex1e, 39 Earnings per share 752,955 39,629 $ 2.44 583,546 5 36, se1 (1) Debt and equity ratios. Choose Deno - Debt Choose Numerator: Debt ratio 2017 2016 uity Rationenominatori Choose Denominator: Choose Numerator: Equity ratio 2017 2016 15 PM

Explanation / Answer

Debt ratio = Total liabilities / Total assets

2016:

Debt ratio = $207859 / $525586

= 0.40

2017:

Debt ratio = $270985 / $609680

= 0.44

Equity ratio = Total equity / Total assets

2016:

Equity ratio = $317727 / $525586

= 0.60

2017:

Equity ratio = $338695 / $609680

= 0.56

Debt to equity ratio = Total liabilities / shareholders equity

2016:

Debt to equity ratio = $207859 / $317727

= 0.65

2017:

Debt to equity ratio = $270985 / $338695

= 0.8

Times interest earned ratio = EBIT / Interest expense

2016:

Times interest earned ratio = $60668 / $14385

= 4.22 times

2017:

Times interest earned ratio = $63407 / $13474

= 4.71 times.

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