Question

Simon Company's year-end balance sheets follow. 2017 2016 2015 At Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets 31,178 $ 36,444 37,211 89,469 65,041 49,128 111,365 85,112 52,327 4,013 281,159 254, 691 225, 821 $523,211 $451,044 $ 368, 500 10,040 9,756 Liabilities and Equity Accounts payable Long-term notes payable secured by $127,674 78,513 $ 50,101 mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 95,413 101,665 83,882 162,500 162,500 162,500 137, 624 108,366 72,017 $523,211 $451,044 $368,500 The company's income statements for the years ended December 31, 2017 and 2016, follow. For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income taxes Total costs and expenses Net income 2017 $680, 174 $ 536, 742 $414, 906 210,854 11,563 8,842 $348, 882 135,796 12, 345 8,051 646, 165 $ 34,009 $ 2.09 505,074 s 31,668 $ 1.95 Earnings per share Calculate the company's long-term risk and capital structure positions at the end of 2017 and 2016 by computing the following ratios. (1) Debt and equity ratios Debt Ratio z Debt Ratio Choose Numerator: Choose Denominator: Debt ratio 01 % 01% 2017: 2016: Ra Equity Equity ratio Ra Choose Numerator: l Choose Denominator: 01 % 2017 2016

Answer 1

Total debts of the company:
			2017	2016
Accounts payable			127674	78513
Long term note payable			95413	101665
Total debts			223087	180178
Total Stockholder's equity of the company
			2017	2016
Common Stock capital			162500	162500
Retained earnings			137624	108366
Total Stockholder's equity			300124	270866
Req
Debt ratio
Year	Total debts        /		Total Assets     =		Debt ratio
2017	223087   /		523211		0.43
2016	180178    /		451044		0.4
Equity ratio:
Year	Stockholder's Equity        /		Total Assets     =		Debt ratio
2017	300124    /		523211		0.57
2016	270866    /		451044		0.6