Compute the five debt management ratios for 2022 and 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Debt Management Ratios
Financial statements for Steele Inc. follow.
Steele Inc. | ||||||
Consolidated Income Statements | ||||||
(in thousands except per share amounts) | ||||||
2023 | 2022 | 2021 | ||||
Net sales | $7,245,088 | $6,944,296 | $6,149,218 | |||
Cost of goods sold | (5,286,253) | (4,953,556) | (4,355,675) | |||
Gross margin | $1,958,835 | $1,990,740 | $1,793,543 | |||
General and administrative expenses | (1,259,896) | (1,202,042) | (1,080,843) | |||
Special and nonrecurring items | 2,617 | 0 | 0 | |||
Operating income | $701,556 | $788,698 | $712,700 | |||
Interest expense | (63,685) | (62,398) | (63,927) | |||
Other income | 7,308 | 10,080 | 11,529 | |||
Gain on sale of investments | 0 | 9,117 | 0 | |||
Income before income taxes | $645,179 | $745,497 | $660,302 | |||
Provision for income taxes | (254,000) | (290,000) | (257,000) | |||
Net income | $391,179 | $455,497 | $403,302 |
Steele Inc. | ||||
Consolidated Balance Sheets | ||||
(in thousands) | ||||
ASSETS | Dec. 31, 2023 | Dec. 31, 2022 | ||
Current assets: | ||||
Cash and equivalents | $320,558 | $41,235 | ||
1,056,911 | 837,377 | |||
Inventories | 733,700 | 803,707 | ||
Other | 109,456 | 101,811 | ||
Total current assets | $2,220,625 | $1,784,130 | ||
Property and equipment, net | 1,666,588 | 1,813,948 | ||
Other assets | 247,892 | 248,372 | ||
Total assets | $4,135,105 | $3,846,450 | ||
LIABILITIES AND |
||||
Current liabilities: | ||||
Accounts payable | $250,363 | $309,092 | ||
Accrued expenses | 347,892 | 274,220 | ||
Other current liabilities | 15,700 | 0 | ||
Income taxes | 93,489 | 137,466 | ||
Total current liabilities | $707,444 | $720,778 | ||
Long-term debt | 650,000 | 541,639 | ||
275,101 | 274,844 | |||
Other long-term liabilities | 61,267 | 41,572 | ||
Total liabilities | 1,693,812 | 1,578,833 | ||
Stockholders’ equity: | ||||
$100,000 | $100,000 | |||
Common stock | 89,727 | 89,727 | ||
Additional paid-in capital—common stock | 128,906 | 127,776 | ||
Retained earnings | 2,397,112 | 2,136,794 | ||
$2,715,745 | $2,454,297 | |||
Less: |
(274,452) | (186,680) | ||
Total stockholders’ equity | $2,441,293 | $2,267,617 | ||
Total liabilities and stockholders’ equity | $4,135,105 | $3,846,450 |
Required:
1. Compute the five debt management ratios for 2022 and 2023. Round your answers to two decimal places.
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