2015 At December 31 Assets Cash Accounts receivable, net 72,731 52,904 40,341 Me

Question

2015 At December 31 Assets Cash Accounts receivable, net 72,731 52,904 40,341 Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable 2017 2016 $ 25,862 30,829 $ 30,867 95,178 71,293 42,959 3,498 232,072 211,497191,035 $434,007 $374,144 $308,700 8,164 7,621 $108,068 64,495 $ 40,341 secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity 82,409 88,635 67,540 162,500 162,500 162,500 81,030 58,514 38,319 $434,007 $374,144 $308,700 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 2017 2016 $564,209 $445,231 $289,400 112,643 10,240 6,678 $344,167 other operating 174,905 expenses Interest expense Income taxes7,335 Total costs and expenses Net income Earnings per share 9,592 535,999 $ 28,210 $ 1.74 418,961 $ 26,270 $ 1.62 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 Choose Denominator: Debt Ratio Debt ratio Choose Numerator: 201 201 Equity Ratio Choose Denominator: Equity Ratio Choose Numerator: Equity ratio 201

Explanation / Answer

1) Debt ratio=Total liabilities/Total assets

2017 : (108068+82409)/434007 = 44%

2016 : (64495+88635)/374144 = 41%

Equity Ratio=Total equity/Total Assets

2017 : (162500+81030)/434007 = 56%

2016 : (162500+58514)/374144 = 59%

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