Required information [The following information applies to the questions display

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Required information [The following information applies to the questions displayed below.,] Simon Company's year-end balance sheets follow At December 31 AssetsS Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets 2017 2016 2015 31,960 $ 36,249 $ 37,763 66,02549,334 113,006 86,392 55, 260 4,281 291,505 263,887 238,662 $536, 338 $462,360 $385,300 89,880 9,987 9, 807 Liabilities and Equity Accounts payable Long-term notes payable secured by $129,542 $ 78,920 $ 49,334 mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 102,848 104,216 86,003 162,500 162,500 162,500 141,448 116,724 87,463 $536,338 $462,360 $385,300 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 2016 $697,239 550,208 $425,316 216,144 11,853 9,064 $357,635 139,203 12,655 8,253 662, 377 $ 34,862 517,746 $ 32,462 $ 2.00 Earnings per share $ 2.15 Calculate the company's long-term risk and capital structure positions at the end of 2017 and 2016 by computing the following ratios (3) Times interest earned Times Interest Earned Choose Numerator: Choose Denominator: Times Interest Earned Times interest earned 2017: times 2016 times

Explanation / Answer

Earnings before interest and taxes (EBIT) = Net income + Interest expense + Income taxes

2017 EBIT = 34,862 + 11,853 + 9,064 = 55,779

2016 EBIT = 32,462 + 12,655 + 8,253 = 53,370

Choose Numerator : / Choose Denominator = Times interest earned Earnings before interest and taxes / Interest expense = Times interest earned 2017 55,779 / 11,853 = 4.71 2016 53,370 / 12,655 = 4.22

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