Ratio of Liabilities to Stockholders' Equity and Number of Times Interest Charges are 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%, issued 2009, due 2019	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 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.

Current year
Previous year

b. Determine the number of times the bond interest charges are earned during the year for both years.

Current year
Previous year

c. The ratio of liabilities to stockholders' equity has improved and the number of times bond interest charges were earned has improved from the previous year. These results are the combined result of a larger income before income taxes and lower serial bonds payable in the current year compared to the previous year.