Simon Company’s year-end balance sheets follow. At December 31 Current Year 1 Year Ago 2 Years Ago Assets Cash $ 26,504 $ 31,600 $ 32,927 Accounts receivable, net 78,353 52,590 43,033 Merchandise inventory 94,650 73,075 45,358 Prepaid expenses 8,364 7,970 3,586 Plant assets, net 241,347 222,022 204,396 Total assets $ 449,218 $ 387,257 $ 329,300 Liabilities and Equity Accounts payable $ 111,855 $ 64,138 $ 44,337 Long-term notes payable 84,453 87,288 74,231 Common stock, $10 par value 162,500 162,500 162,500 Retained earnings 90,410 73,331 48,232 Total liabilities and equity $ 449,218 $ 387,257 $ 329,300 The company’s income statements for the current year and one year ago,follow For Year Ended December 31 Current Year 1Year Ago Sales $ 583,983 $ 460,836 Cost of goods sold $ 356,230 $ 299,543 Other operating expenses 181,035 116,592 Interest expense 9,928 10,599 Income tax expense 7,592 6,913 Total costs and expenses 554,785 433,647 Net income $ 29,198 $ 27,189 Earnings per share $ 1.80 $ 1.67 (1) Compute debt and equity ratio for the current year and one year ago. Please don't provide answer in image format thank you
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Simon Company’s year-end balance sheets follow.
| At December 31 | Current Year | 1 Year Ago | 2 Years Ago |
|---|---|---|---|
| Assets | |||
| Cash | $ 26,504 | $ 31,600 | $ 32,927 |
| 78,353 | 52,590 | 43,033 | |
| Merchandise inventory | 94,650 | 73,075 | 45,358 |
| Prepaid expenses | 8,364 | 7,970 | 3,586 |
| Plant assets, net | 241,347 | 222,022 | 204,396 |
| Total assets | $ 449,218 | $ 387,257 | $ 329,300 |
| Liabilities and Equity | |||
| Accounts payable | $ 111,855 | $ 64,138 | $ 44,337 |
| Long-term notes payable | 84,453 | 87,288 | 74,231 |
| Common stock, $10 par value | 162,500 | 162,500 | 162,500 |
| 90,410 | 73,331 | 48,232 | |
| Total liabilities and equity | $ 449,218 | $ 387,257 | $ 329,300 |
The company’s income statements for the current year and one year ago,follow
For Year Ended December 31 Current Year 1Year Ago
| Sales | $ 583,983 | $ 460,836 | ||
|---|---|---|---|---|
| Cost of goods sold | $ 356,230 | $ 299,543 | ||
| Other operating expenses | 181,035 | 116,592 | ||
| Interest expense | 9,928 | 10,599 | ||
| Income tax expense | 7,592 | 6,913 | ||
| Total costs and expenses | 554,785 | 433,647 | ||
| Net income | $ 29,198 | $ 27,189 | ||
| Earnings per share | $ 1.80 | $ 1.67 |
(1) Compute debt and equity ratio for the current year and one year ago.
Please don't provide answer in image format thank you
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