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-dividend-earned ratio for the past three years from the following data taken from the firms financial statements:

Year		20X1		20X2		20X3
Operating income	$	11,000,000	$	15,000,000	$	18,000,000
Interest		3,500,000		5,100,000		8,100,000
Taxes		3,600,000		4,800,000		4,500,000
Preferred dividends		1,000,000		1,300,000		1,300,000
Common dividends		2,700,000		1,600,000

Round your answers to two decimal places.

20X1: _____________

20X2: ___________

20X3: ____________

What does your analysis indicate about the firms capacity to pay preferred stock dividends?

Times preferred dividend earned has _________-Select- declined or increased each year, which indicates the firm's capacity to pay the dividend has________ -Select- diminished or improved