Given the following Year 12 Financial Statement data for a footwear company:
Income Statement Data
Year 12 (in 000s)
Net Revenues from Footwear Sales $ 300,000
Operating Profit (Loss) 75,000
Net Profit (Loss) $ 45,500
Balance Sheet Data
Cash on Hand 10,000
Total Current Assets $ 70,000
Total Assets 320,000
Overdraft Loan Payable 5,000
1 Year Bank Loan Payable 12,000
Current Portion of Long term Loans 20,000
Total Current Liabilities 58,500
Long Term Bank Loans Outstanding 100,000
Shareholder Equity: Year 11 Balance Year 12 Change
Common Stock 10,000 0 10,000
Additional Capital 101,000 0 101,000
Retained Earnings 30,000 20,500 50,500
Total Shareholder Equity 141,000 +20,500 161,500
Other Financial Data
Depreciation $12,500
Dividend payments $25,000
Based on the above figures and the formula for calculating the default risk ratio found on the Help screen for p. 5 of the Footwear Industry Report and p. 28 of the Players Guide, the companys default risk ratio in Year 12 was
A. 1.65.
B. 0.89.
C. 0.77.
D. 1.03.
E. None of these.