(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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EXPLAIN THE RESULTS OF TOTAL LIABILITIES IN VERTICAL ANALYSIS
6
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