Question

Book Calculator Ratio of Liabilities to Stockholders' Equity and Times Interest Eamed The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Current Year Prior Year Accounts payable $196,000 $164,000 Current maturities of serial bonds payable 260,000 260,000 Serial bonds payable, 10% 1,260,000 1,520,000 Common stock, $1 par value 60,000 70,000 Pald-in capital in excess of par 630,000 630,000 Retained earnings 2,170,000 1,730,000 The income before income tax expense was $380,000 and $332,500 for the current and prior years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current year Prior year b. Determine the times interest earned ratio for both years. Round to one decimal place. Current year Prior year and the times interest earned ratio has from the previous year. These income before income taxes and interest expense in the current year compared to the c. The ratio of liabilities to stockholders' equity have results are the combined result of a previous year. Previous Next > Check My Work Save and Exit Submit Assignment for Grading

Answer 1

C) 1) the ratio of liabilities to stockholders has decreased from 0.8 to 0.6

2) the times interest earned has increased from 2.9times to 3.5 times

3) income before tax has increased from 332500 to 380000

4) the interest expense has decreased from 178000 to 152000.

All other answers are shown in the images attached.

1716000 0,6 0.8 a) Ratior of Liabilities to stackholders' equity Total Stockholders' equity* Current year =) 28, 60,000 Preor year 1944,000 24,30,000 Total Liabilities - Accounts payable + cument matunities of sencil bords payable + Serial Bonds pályable For current → 49 6,000+ 2,60,000 +12,60,000 5) 1716 00 0 For prior year 1,20,000 5 1544,000 5) 164006+ 2,696007 * Total STOCKHOLDER'S EQUITY_=) Common Stodo fpud in capitulun excess of par t Retained earning Current years_60,000+ 630098c 2, 70,00 6 =) 28,60,000 Prior = 70,00 ot 6,30,000 t gear 127,30,000 = 24,30,000.

b Ы Times Interest earned - Income before tax t Interest Expense Interest Expense Prior year = Cument year - 3,80,000 +15200 o_ 152,000 =) 3.5 times 3,32,500 + 178000 122000 2.87 on =) 2.9 times * Calculation of Interest, Expense => [current matunities of senel Bond payable + Serieel Bonds Spayable I have Internal Current year to 1,66,000 +1260,000 xjo 100 = 152000 Prior year 260,000 + 19,20,000 x 10 100 5) 178,000 ca) decreased b) increased c) increased d) decreased a, b,c,d is just for the sequence of the fillin the blanks