Ratio of Liabilities to Stockholders' Equity and Times Interest Earned

The following data were taken from the financial statements of Starr Construction Inc. for December 31, 20Y6 and 20Y5:

Dec. 31, 20Y6Dec. 31, 20Y5Accounts payable and other liabilities$1,700,000$2,325,000Current maturities of bonds payable500,000500,000Serial bonds payable, 8%, issued 2008, due in five years5,000,0005,500,000Common stock, $5 par value250,000250,000Paid-in capital in excess of par1,500,0001,500,000Retained earnings10,250,0007,500,000

The income before income tax was $2,816,000 and $2,640,000 for the years 20Y6 and 20Y5, respectively.

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

Dec. 31, 20Y6Dec.

31, 20Y5

b.Determine the times (bond) interest earned during the year for both years. Round to one decimal place.

Dec. 31, 20Y6Dec.

31, 20Y5

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