The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years:

Current

YearPrevious

YearAccounts payable$200,000$166,000Current maturities of serial bonds payable260,000260,000Serial bonds payable, 10%1,250,0001,510,000Common stock, $1 par value50,00070,000Paid-in capital in excess of par630,000630,000Retained earnings2,170,0001,720,000

The income before income tax expense was $422,800 and $370,000 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 yearPrevious year

b.Determine the times interest earned ratio for both years. Round to one decimal place.

Current yearPrevious year

c.The ratio of liabilities to stockholders' equity hasimproved

and the number of times bond interest charges were earned hasimproved

from the previous year. These results are the combined result of alarger

income before income taxes andlower

interest expense in the current year compared to the previous year.