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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 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.

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.
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 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.
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