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 |
$924,000 |
|
$800,000 |
|
Current maturities of serial bonds payable |
200,000 |
|
200,000 |
|
Serial bonds payable, 10% |
1,000,000 |
|
1,200,000 |
|
Common stock, $10 par value |
250,000 |
|
250,000 |
|
Paid-in capital in excess of par |
1,250,000 |
|
1,250,000 |
|
Retained earnings |
860,000 |
|
500,000 |
|
The income before income tax expense was $480,000 and $420,000 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 |
fill in the blank 1 |
Previous year |
fill in the blank 2 |
b.Determine the times interest earned ratio for both years. Round to one decimal place.
Current year |
fill in the blank 3 |
Previous year |
fill in the blank 4 |
c.The ratio of liabilities to stockholders' equity has and the number of times bond interest charges were earned 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.
Extracted text: 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 Previous Year Year Accounts payable $924,000 $800,000 Current maturities of serial bonds payable 200,000 200,000 Serial bonds payable, 10% 1,000,000 1,200,000 Common stock, $10 par value 250,000 250,000 Paid-in capital in excess of par 1,250,000 1,250,000 Retained earnings 860,000 500,000 The income before income tax expense was $480,000 and $420,000 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 0.9 Previous year 1.1 b. Determine the times interest earned ratio for both years. Round to one decimal place. Current year 5.2 X Previous year c. The ratio of liabilities to stockholders' equity has and the number of times bond interest charges were earned 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.