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Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken...

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Accounting

Ratio of Liabilities to Stockholders' Equity and Times Interest Earned

The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years:

Current Year Previous Year
Accounts payable $744,000 $198,000
Current maturities of serial bonds payable 460,000 460,000
Serial bonds payable, 10% 1,890,000 2,350,000
Common stock, $1 par value 90,000 110,000
Paid-in capital in excess of par 970,000 980,000
Retained earnings 3,360,000 2,670,000

The income before income tax was $564,000 and $493,500 for the current and previous years, respectively.

a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place.

Current year
Previous year

b. Determine the times interest earned ratio for both years. Round to one decimal place.

Current year
Previous year

c. The ratio of liabilities to stockholders' equity has and the times interest earned ratio has from the previous year. These results are the combined result of a income before income taxes and interest expense in the current year compared to the previous year.

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