Ratio of liabilities to stockholders’ equity and times interest Obj. 4 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 $ 924,000 $ 800,000 Current maturities of serial bonds payable 200,000 200,000 Serial bonds payable, 10% 1,000,000 1,200,000 Common stock, $10 par value 250,000 250,000 Paid-in capital in excess of par 1,250,000 1,250,000 Retained earnings 860,000 500,000 The income before income tax expense was $480,000 and $420,000 for the current and previous years, respectively.

a. Determine the ratio of liabilities to stockholders’ equity at the end of each year. Round to one decimal place.

b. Determine the times interest earned ratio for both years. Round to one decimal place.

c. What conclusions can be drawn from these data as to the company’s ability to meet its currently maturing debts?

AppendixLO1