Ratio of Liabilities to Stockholders' Equity and Times InterestEarned
The following data were taken from the financial statements ofHunter Inc. for December 31 of two recent years:
| Current Year | Previous Year |
| Accounts payable | $604,000 | | $290,000 | |
| Current maturities of serial bonds payable | 530,000 | | 530,000 | |
| Serial bonds payable, 10% | 2,370,000 | | 2,900,000 | |
| Common stock, $1 par value | 90,000 | | 110,000 | |
| Paid-in capital in excess of par | 960,000 | | 970,000 | |
| Retained earnings | 3,330,000 | | 2,640,000 | |
The income before income tax was $1,044,000 and $913,500 for thecurrent and previous years, respectively.
a. Determine the ratio of liabilities tostockholders' equity at the end of each year. Round to one decimalplace.
| Current year | |
| Previous year | |
b. Determine the times interest earned ratiofor both years. Round to one decimal place.
| Current year | |
| Previous year | |
c. The ratio of liabilities to stockholders'equity has   and the times interest earned ratio has___ from the previous year. These results are the combined resultof a ___ income before income taxes and   interestexpense in the current year compared to the previous year.
