Ratio of Liabilities to Stockholders' Equity and Times InterestEarned
The following data were taken from the financial statements ofHunter Inc. for December 31 of two recent years:
| Current Year | Previous Year |
| Accounts payable | $628,000 | | $193,000 | |
| Current maturities of serial bonds payable | 410,000 | | 410,000 | |
| Serial bonds payable, 10% | 1,710,000 | | 2,120,000 | |
| Common stock, $1 par value | 90,000 | | 120,000 | |
| Paid-in capital in excess of par | 1,010,000 | | 1,010,000 | |
| Retained earnings | 3,480,000 | | 2,760,000 | |
The income before income tax was $572,400 and $500,900 for thecurrent and previous years, respectively.
a. Determine the ratio of liabilities tostockholders' equity at the end of each year. Round to one decimalplace.
| Current year | |
| Previous year | |
b. Determine the times interest earned ratiofor both years. Round to one decimal place.
| Current year | |
| Previous year | |
