Debt ratio, Ratio of Liabilities to Stockholders' Equity, and Times Interest Earned

Camper Company and McSead, Inc., are the two largest toy companies. Condensed liabilities and stockholders' equity from a recent balance sheet are shown for each company as follows:

		Camper		McSead
Current liabilities		$1,477,000		$3,246,000
Long-term debt		795,800		1,906,000
Total liabilities		$2,272,800		$5,152,000
Total stockholders' equity		3,788,000		6,440,000
Total liabilities and stockholders' equity		$6,060,800		$11,592,000

The income from operations and interest expense from the income statement for both companies were as follows:

	Camper		McSead
Income from operations before tax	$513,345.6		$1,485,210
Interest expense	43,200		159,700

a. Determine the debt ratio for both companies. Round to one decimal place.

Camper	%
McSead	%

b. Determine the ratio of liabilities to stockholders' equity for both companies. Enter your answers as decimal values rounded to one decimal place.

Camper
McSead

c. Determine the number of times interest charges are earned for both companies. Round to one decimal place.

Camper
McSead

d. What conclusions can be drawn from these data as to the ability of these two companies to meet their interest obligations?