Question
Ratio of Liabilities to Stockholders' Equity and Number of Times Interest Charges are Earned The following data were taken from the financial statements of Weal
Ratio of Liabilities to Stockholders' Equity and Number of Times Interest Charges are Earned The following data were taken from the financial statements of Weal Construction Inc. for December 31 of two recent years: Current Year Previous Year Accounts payable $502,000 $136,000 Current maturities of serial bonds payable 310,000 310,000 Serial bonds payable, 10%, issued 2009, due 2019 1,260,000 1,570,000 Common stock, $1 par value 60,000 70,000 Paid-in capital in excess of par 650,000 660,000 Retained earnings 2,250,000 1,790,000 The income before income tax was $376,800 and $329,700 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. Current year Previous year b. Determine the number of times the bond interest charges are earned during the year for both years. Round to one decimal place. Current year Previous year c. The ratio of liabilities to stockholders' equity has and the number of times bond interest charges were earned has from the previous year. These results are the combined result of a income before income taxes and serial bonds payable in the current year compared to the previous year.
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