Homework Answers
a) Ratio of liabilities to stockholder's equity = Total liabilities/Total stockholder's equity
Dec 31 20Y6 = 1730000/3460000 = 50%
Dec 31 20Y5 = 2058000/2940000 = 70%
b) Times interest earned = Income before interest and tax/Interest expense
Dec 31, 20Y6 = (431200+128000)/128000 = 4.4 Times
Dec 31, 20Y5 = (394800+161000)/161000 = 3.5 Times
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