Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below) Simon Company's year-end balance sheets follow At December 31 2017 2016 2015 Assets Cash Accounts receivable, net 72,731 52,904 40,341 Merchandise inventory $ 25,862 $ 30,829 $ 30,867 95,178 71,293 42,959 3,498 232,072 211,497 191,035 $434,007 $374,144 $308,700 8,164 7,621 Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable $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 81,03058,514 38,319 $434,007 $374,144 $308,700 The company's income statements for the years ended December 31, 2017 and 2016, followw For Year Ended December 31 Sales cost of goods $344,167 sold other operating 174,905 expenses Interest expense Income taxes7,335 Total costs and expenses Net income 2017 2016 $564,209 $445,231 $289,400 112,643 10,240 6,678 9,592 535,999 $ 28,210 $1.74 418,961 $ 26,270 $1.62 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 (2) Debt-to-equity ratio Debt-To-Equity Ratio Choose Numerator: Debt-To-Equity Ratio Debt-to-equity ratio Choose Denominator: 201 201 to 1 to 1

Explanation / Answer

The debt to equity ratio would depict the long term risk and capital structure positions of the company.

Debt represents the long term borrowing of the company from outsiders

Equity represents the own capital in the form of common stock and retained earnings

Pls find the computation of debt to equity ratio as below:

  

Year Debt in $ Equity in $= sum of common stock and retained earnings Debt To Equity Ratio 2016 88635 162500+58514 = 221014 0.40 to 1 2017 82409 162500+81030 = 243530 0.34 to 1

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