Evaluating Liabilities Broader Company reported the following summarized balance sheet amounts at December 31, 2001:

Broader reported operating income of $340,000 and net income of $298,000 for 2001. The 6 percent bonds outstanding were issued at par value in 1998.

a. Compute the current ratio.

b. Compute the debt-to-equity ratio.

c. Compute the number of times interest is earned ratio for 2001.

d. Why might an investor consider Broader’s bonds risky?

e. Why might an investor consider Broader’s bonds reasonably safe?

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Current Assets Buildings and Equipment (net) Land $350,000 500,000 70,000 Goodwill 60,000 Total Assets $980,000 Current Liabilities $150,000 Bonds Payable 600,000 Deferred Income Tax 90,000 Common Stock, par value 100,000 Retained Earnings 40,000 Total Liabilities and Owners' Equity $980,000