Question

Debt Management Ratios

Financial statements for Remington Inc. follow.

RemingtonInc.
ConsolidatedStatements of Income
(In thousands exceptper share amounts)
	2013		2012		2011
Net sales	$ 7,245,088		$ 6,944,296		$ 6,149,218
Cost of goods sold	(5,286,253)		(4,953,556)		(4,355,675)
Gross margin	$ 1,958,835		$ 1,990,740		$ 1,793,543
General and administrativeexpenses	(1,259,896)		(1,202,042)		(1,080,843)
Special and nonrecurring items	2,617		-		-
Operating income	$ 701,556		$ 788,698		$ 712,700
Interest expense	(63,685)		(62,398)		(63,927)
Other income	7,308		10,080		11,529
Gain on sale of investments	-		9,117		-
Income before income taxes	$ 645,179		$ 745,497		$ 660,302
Provision for income taxes	254,000		290,000		257,000
Net income	$ 391,179		$ 455,497		$ 403,302
Net income per share	$1.08		$1.25		$1.11

RemingtonInc.
ConsolidatedBalance Sheets
(In thousands)
ASSETS	Dec. 31,2013			Dec. 31,2012
Current assets:
Cashand equivalents		$ 320,558			$ 41,235
Accounts receivable		1,056,911			837,377
Inventories		733,700			803,707
Other		109,456			101,811
Total current assets		$2,220,625			$1,784,130
Property and equipment, net		1,666,588			1,813,948
Other assets		205,342			248,372
Total assets		$4,092,555			$3,846,450
LIABILITIES ANDSTOCKHOLDERS' EQUITY
Currentliabilities:
Accounts payable		$ 250,363			$ 309,092
Accrued expenses		347,892			274,220
Other current liabilities		15,700			-
Income taxes		93,489			137,466
Total current liabilities		$ 707,444			$ 720,778
Long-term debt		$ 650,000			$ 541,639
Deferred income taxes		275,101			274,844
Other long-term liabilities		61,267			41,572
Total liabilities		$1,693,812			$1,578,833
Stockholders'equity:
Common and preferred stock		$ 189,727			$ 189,727
Additional paid-in capital		128,906			127,776
Retained earnings		2,397,112			2,136,794
		$2,715,745			$2,454,297
Less: Treasury stock, at cost		(317,002)			(186,680)
Total stockholders' equity		2,398,743			$2,267,617
Total liabilities and stockholders'equity		4,092,555			$3,846,450

Required:

Using Remington's financial statements as shown above, respondto the following requirements.

1. Compute the five debt management ratios for2012 and 2013. Round your answers to two decimal places.

	2013	2012
Times interest earned
Debt to equity ratio
Debt to total assets ratio
Long-term debt to equity ratio
Long-term debt to total assetsratio

2. Conceptual Connection: Indicate whether theratios have changed significantly from 2012 to 2013.

Select All the ratios decreased,Times interest earned ratiodecreased, other ratios did not change by much., Debt to equityratio decreased, other ratios did not change by much., Debt tototal assets ratio decreased, other ratios did not change by much,Long-term-debt to equity ratio decreased, other ratios did notchange by much, Long-term-debt to total assets ratio decreased,other ratios did not change by much.

B. Do the ratios suggest that Remington is more or less riskyfor long-term creditors at December 31, 2013, than at December 31,2012? Explain.

SelectMore risky for long-term creditors Less risky forlong-term creditors