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

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
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Problem 13E: Ratio of liabilities to stockholders equity and times interest earned The following data were taken...
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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 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  
Previous year  

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

Current year  
Previous year  
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