(1) Compute debt and equity ratio for the current year and one year ago.Current Year:1 Year Ago:Current Year:1 Year Ago:Numerator:Total liabilitiesNumerator:Total equityDebt RatioDenominator:/ Total assetsEquity Ratio11Denominator:/Total assets=1111Debt RatioDebt ratioEquity RatioEquity r0 %0%0 %0 % Simon Company's year-end balance sheets follow.At December 31AssetsCashAccounts receivable, netMerchandise inventoryPrepaid expensesPlant assets, netTotal assetsLiabilities and EquityAccounts payableLong-term notes payable.Common stock, $10 par valueRetained earningsTotal liabilities and equityCurrent Year 1 Year Ago 2 Years Ago$ 38,057$ 37,692$ 32,88091,55967,91851,292120,99186,26455,1789,8914,27410,381290,549268,870$ 546,360$ 471,000$ 136,044100,661162,500147,155$ 78,803107,247162,500122,450$ 546,360 $ 471,000Current YearThe company's income statements for the current year and one year ago, follow.For Year Ended December 31SalesCost of goods soldOther operating expensesInterest expenseIncome tax expenseTotal costs and expensesNet incomeEarnings per share.$ 433,263220,18312,0759,233$ 710,268244,064$ 392,500674,754$ 35,514$ 2.19$ 52,84688,477162,50088,677$ 392,5001 Year Ago$364,319141,80412,8918,407$ 560,490527,421$ 33,069$ 2.04

DEBT RATIODebt Ratio is the Ratio Between Total Liabilities & Total Assets.Debt Ratio = Total…

(1) Compute debt and equity ratio for the current year and one year ago. Current Year: 1 Year Ago: Current Year: 1 Year Ago: Numerator: Total liabilities Numerator: Total equity Debt Ratio Denominator: / Total assets Equity Ratio 1 /Total assets 1 1 Denominator: 11 = 11 11 11 11 Debt Ratio Debt ratio Equity Ratio Equity r 0 % 0 % 0 % 0 %

(1) Compute debt and equity ratio for the current year and one year ago. Current Year: 1 Year Ago: Current Year: 1 Year Ago: Numerator: Total liabilities Numerator: Total equity Debt Ratio Denominator: / Total assets Equity Ratio 1 /Total assets 1 1 Denominator: 11 = 11 11 11 11 Debt Ratio Debt ratio Equity Ratio Equity r 0 % 0 % 0 % 0 %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

(1) Compute debt and equity ratio for the current year and one year ago.
Current Year:
1 Year Ago:
Current Year:
1 Year Ago:
Numerator:
Total liabilities
Numerator:
Total equity
Debt Ratio
Denominator:
/ Total assets
Equity Ratio
1
1
Denominator:
/Total assets
=
11
11
Debt Ratio
Debt ratio
Equity Ratio
Equity r
0 %
0%
0 %
0 %

Simon Company's year-end balance sheets follow.
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.
Common stock, $10 par value
Retained earnings
Total liabilities and equity
Current Year 1 Year Ago 2 Years Ago
$ 38,057
$ 37,692
$ 32,880
91,559
67,918
51,292
120,991
86,264
55,178
9,891
4,274
10,381
290,549
268,870
$ 546,360
$ 471,000
$ 136,044
100,661
162,500
147,155
$ 78,803
107,247
162,500
122,450
$ 546,360 $ 471,000
Current Year
The company's income statements for the current year and one 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
Earnings per share.
$ 433,263
220,183
12,075
9,233
$ 710,268
244,064
$ 392,500
674,754
$ 35,514
$ 2.19
$ 52,846
88,477
162,500
88,677
$ 392,500
1 Year Ago
$364,319
141,804
12,891
8,407
$ 560,490
527,421
$ 33,069
$ 2.04

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