Solution-Determine the times interest earned ratio for both

Determine the times interest earned ratio for both years

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Reference no: EM133150283

Question - 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	$305,000	$116,000
Current maturities of serial bonds payable	220,000	220,000
Serial bonds payable, 10%	950,000	1,170,000
Common stock, $1 par value	60,000	80,000
Paid-in capital in excess of par	650,000	650,000
Retained earnings	2,240,000	1,780,000

The income before income tax expense was $339,300 and $296,900 for the current and previous years, respectively.

Required -

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.

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.

Reference no: EM133150283

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Determine the times interest earned ratio for both years

Reference no: EM133150283

Reference no: EM133150283

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