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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 Prior Year Accounts payable $924,000 Current maturities of serial bonds payable 200,000 Serial bonds payable, 10% 1,000,000 Common stock, $10 par value 250,000 Paid-in capital in excess of par 1,250,000 Retained earnings 860,000 The income before income tax expense was $480,000 and $420,000 for the current and prior years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current year Prior year b. Determine the times interest earned ratio for both years. Round to one decimal place. $800,000 200,000 1,200,000 250,000 1,250,000 500,000

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 Prior Year Accounts payable $924,000 Current maturities of serial bonds payable 200,000 Serial bonds payable, 10% 1,000,000 Common stock, $10 par value 250,000 Paid-in capital in excess of par 1,250,000 Retained earnings 860,000 The income before income tax expense was $480,000 and $420,000 for the current and prior years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current year Prior year b. Determine the times interest earned ratio for both years. Round to one decimal place. $800,000 200,000 1,200,000 250,000 1,250,000 500,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Prior Year $800,000 200,000 1,200,000 250,000 1,250,000 500,000 Accounts payable $924,000 Current maturities of serial bonds payable 200,000 Serial bonds payable, 10% 1,000,000 Common stock, $10 par value 250,000 Paid-in capital in excess of par 1,250,000 Retained earnings 860,000 The income before income tax expense was $480,000 and $420,000 for the current and prior years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current year Prior year b. Determine the times interest earned ratio for both years. Round to one decimal place. Current year Prior year c. The ratio of liabilities to stockholders' equity have improved ✔and the times interest earned ratio has improved These results are the combined result of a larger ✓income before income taxes and lower the previous year. ✓ from the previous year. interest expense in the current year compared to
Transcribed Image 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 Year Prior Year $800,000 200,000 1,200,000 250,000 1,250,000 500,000 Accounts payable $924,000 Current maturities of serial bonds payable 200,000 Serial bonds payable, 10% 1,000,000 Common stock, $10 par value 250,000 Paid-in capital in excess of par 1,250,000 Retained earnings 860,000 The income before income tax expense was $480,000 and $420,000 for the current and prior years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current year Prior year b. Determine the times interest earned ratio for both years. Round to one decimal place. Current year Prior year c. The ratio of liabilities to stockholders' equity have improved ✔and the times interest earned ratio has improved These results are the combined result of a larger ✓income before income taxes and lower the previous year. ✓ from the previous year. interest expense in the current year compared to
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