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 $145,000 $226,000 Current maturities of serial bonds payable 310,000 310,000 Serial bonds payable, 10% 1,590,000 1,900,000 Common stock, $1 par value 80,000 110,000 Paid-in capital in excess of par 900,000 900,000 Retained earnings 3,110,000 2,470,000 The income before income tax was $456,000 and $399,000 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: ________ c. The ratio of liabilities to stockholders' equity has ______ (improved/deteriorated) and the times interest earned ratio has _______ (improved/deteriorated) from the previous year. These results are the combined result of a ______ (larger/smaller) income before income taxes and ______ (larger/lower) interest expense in the current year compared to the previous year.
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 $145,000 $226,000 Current maturities of serial bonds payable 310,000 310,000 Serial bonds payable, 10% 1,590,000 1,900,000 Common stock, $1 par value 80,000 110,000 Paid-in capital in excess of par 900,000 900,000 Retained earnings 3,110,000 2,470,000 The income before income tax was $456,000 and $399,000 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: ________ c. The ratio of liabilities to stockholders' equity has ______ (improved/deteriorated) and the times interest earned ratio has _______ (improved/deteriorated) from the previous year. These results are the combined result of a ______ (larger/smaller) income before income taxes and ______ (larger/lower) interest expense in the current year compared to the previous year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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 | $145,000 | $226,000 | ||
| Current maturities of serial bonds payable | 310,000 | 310,000 | ||
| Serial bonds payable, 10% | 1,590,000 | 1,900,000 | ||
| Common stock, $1 par value | 80,000 | 110,000 | ||
| Paid-in capital in excess of par | 900,000 | 900,000 | ||
| 3,110,000 | 2,470,000 |
The income before income tax was $456,000 and $399,000 for the current and previous years, respectively.
a. Determine the ratio of liabilities to
Current Year: _________
Previous Year: ________
b. Determine the times interest earned ratio for both years. Round to one decimal place.
Current Year: _________
Previous Year: ________
c. The ratio of liabilities to stockholders' equity has ______ (improved/deteriorated) and the times interest earned ratio has _______ (improved/deteriorated) from the previous year. These results are the combined result of a ______ (larger/smaller) income before income taxes and ______ (larger/lower) interest expense in the current year compared to the previous year.
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