Use the following financial information for Questions 1-4 below:

From the income statement:

Depreciation expense Interest expense	$170,000 25,000
Income tax Net income	29,000 148,000

From the balance sheet:

Current liabilities	$95,000
Long-term debt	825,000
Deferred income taxes	85,000
Total Liabilities	$1,005,000
Preferred stock	8,000
Common stock	276,000
Premium on common stock	163,000
Retained earnings	678,000
Total Stockholders Equity	$1,125,000
Total Liabilities & Stockholders Equity	$2,130,000

1. What is the Times Interest Earned ratio? _________ /_______ = ___________

2. What is the Debt/Assets (Debt) ratio? ________________ /___________ = __________

3. What is the Debt*/Equity ratio? ________________ /___________ = __________

*Use Long-term debt

4. Consider the additional information for the above analysis:

1. Times Interest Earned: Compare the current year result above (better or worse) to each of the following:

i) Company prior year result of 7.0

ii) Industry average: 5.0

Interpret your findings: Are the results acceptable? Why?

2. Debt /Equity ratio: Compare current year result above ( more or less risk) to each of the following:

i) Company prior year result of 0.8

ii) Industry average: 0.6

Interpret your findings: Are the results acceptable? Why?