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 $740,000 $170,000 Current maturities of serial bonds payable 440,000 440,000 Serial bonds payable, 10% 1,740,000 2,180,000 Common stock, $1 par value 80,000 90,000 Paid-in capital in excess of par Retained earnings 800,000 2,770,000 810,000 2,200,000 The income before income tax expense was $893,800 and $782,100 for the current and previous years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round your answers to one decimal place. Current year Previous year 0.8 1.0 X b. Determine the times interest earned ratio for both years. Round your answers to one decimal place. Current year Previous year 4.8 X 3.8 X from the c. The ratio of liabilities to stockholders' equity has improved previous year. These results are the combined result of a larger compared to the previous year. and the number of times bond interest charges were earned has improved income before income taxes and lower ☑interest expense in the current year

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 $740,000 $170,000 Current maturities of serial bonds payable 440,000 440,000 Serial bonds payable, 10% 1,740,000 2,180,000 Common stock, $1 par value 80,000 90,000 Paid-in capital in excess of par Retained earnings 800,000 2,770,000 810,000 2,200,000 The income before income tax expense was $893,800 and $782,100 for the current and previous years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round your answers to one decimal place. Current year Previous year 0.8 1.0 X b. Determine the times interest earned ratio for both years. Round your answers to one decimal place. Current year Previous year 4.8 X 3.8 X from the c. The ratio of liabilities to stockholders' equity has improved previous year. These results are the combined result of a larger compared to the previous year. and the number of times bond interest charges were earned has improved income before income taxes and lower ☑interest expense in the current year

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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