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31.

Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear below. The company did not issue any new common or preferred stock during the year. A total of 500 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $.50. The market value of the companys common stock at the end of the year was $26. All of the companys sales are on account.

Heritage Antiquing Services Comparative Balance Sheet (dollars in thousands)
	This Year			Last Year
Assets
Current assets:
Cash	$	1,250		$	1,310
Accounts receivable, net		10,000			7,700
Inventory		13,800			12,000
Prepaid expenses		690			530
Total current assets		25,740			21,540
Property and equipment:
Land		9,500			9,500
Buildings and equipment, net		46,506			42,418
Total property and equipment		56,006			51,918
Total assets	$	81,746		$	73,458
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	19,900		$	19,000
Accrued payables		990			770
Notes payable, short term		0			110
Total current liabilities		20,890			19,880
Long-term liabilities:
Bonds payable		9,700			9,700
Total liabilities		30,590			29,580
Stockholders' equity:
Preferred stock		1,000			1,000
Common stock		2,000			2,000
Additional paid-in capital		4,000			4,000
Total paid-in capital		7,000			7,000
Retained earnings		44,156			36,878
Total stockholders' equity		51,156			43,878
Total liabilities and stockholders' equity	$	81,746		$	73,458

Heritage Antiquing Services Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	70,000		$	65,000
Cost of goods sold		38,000			36,000
Gross margin		32,000			29,000
Selling and administrative expenses:
Selling expenses		11,300			10,400
Administrative expenses		7,100			6,000
Total selling and administrative expenses		18,400			16,400
Net operating income		13,600			12,600
Interest expense		970			970
Net income before taxes		12,630			11,630
Income taxes		5,052			4,652
Net income		7,578			6,978
Dividends to preferred stockholders		50			390
Net income remaining for common stockholders		7,528			6,588
Dividends to common stockholders		250			250
Net income added to retained earnings		7,278			6,338
Retained earnings, beginning of year		36,878			30,540
Retained earnings, end of year	$	44,156		$	36,878

Required:

Compute the following financial ratios for long-term creditors for this year:

1.	Times interest earned ratio. (Round your answer to 1 decimal place.)

Times interest earned ratio

2.	Debt-to-equity ratio. (Round your answer to 2 decimal places.)

Debt-to-equity ratio

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