The financial statements of Midwest Tours are given below.

Midwest Tours Income Statement $(2009)$

Sales $ $2,500,000$

Cost of goods sold $1,260,000$

Gross profit $1,240,000$

Selling & administrative expenses $700,000$

Operating profit $540,000$

Interest expense $160,000$

Income before tax $380,000$

Tax expense $152,000$

Net income $ $228,000$

Balance Sheet $20092008$

Cash $ $60,000$ $ $50,000$

Accounts receivable $500,000450,000$

Inventory $300,000270,000$

Total current assets $ $860,000$ $ $770,000$

Fixed assets $2,180,0002,000,000$

Total assets $ $3,040,000$ $ $2,770,000$

Accounts Payable $ $200,000$ $ $170,000$

Bank loan $460,000440,000$

Total current liabilities $ $660,000$ $ $610,000$

Bond payable $860,000860,000$

Total liabilities $ $1,520,000$ $ $1,470,000$

Common stock $(130,000$ shares$)$ $ $120,000$ $ $120,000$

Retained earnings $1,400,0001,300,000$

Total liabilities & equity $ $3,040,000$ $ $2,890,000$

Note: The common shares are trading in the stock market for $$36$ each.

Refer to the financial statements of Midwest Tours. The firm's leverage ratio for $2009$ is:

Multiple Choice

$2\mathrm{.}00.$

$1\mathrm{.}62.$

$2\mathrm{.}17.$

$1\mathrm{.}56.$

$2\mathrm{.}42.$