You are considering purchasing the preferred stock of a firm but are concerned about its capacity to pay the dividend. To help allay that fear, you compute the times-preferred-dividednd-earned ratio for the past three years from the following data taken from thefirms financial statements:

Year 20x1 20x2 20x3

Operating income $12,000,000 $15,000,000 $17,000,000

Interest $3,000,000 $5,900,000 $11,000,000

Taxes $4,000,000 $5,400,000 $4,000,000

Preferred dividends $1,000,000 $1,000,000 $4,000,000

Common dividends $3,000,000 $2,000,000 ------------

What does your analysis indicate about the firm's capacity to pay preferred stock dividends?

Please explain in detail and show all work. Thank you:-)