Reference no: EM132437611

Question - Ratio of Liabilities to Stockholders' Equity and Number of 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	$640,000	$320,000
Current maturities of serial bonds payable	560,000	560,000
Serial bonds payable, 10%	2,560,000	3,120,000
Common stock, $1 par value	100,000	120,000
Paid-in capital in excess of par	1,030,000	1,040,000
Retained earnings	3,570,000	2,840,000

The income before income tax was $1,060,800 and $928,200 for the current and previous years, respectively.

a. Determine the ratio of liabilities to stockholders' equity at the end of each year.

b. Determine the times interest earned ratio for both years.