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	$	20,000,000	$	20,000,000	$	16,000,000
Interest		9,100,000		10,700,000		8,100,000
Taxes		4,000,000		5,200,000		5,300,000
Preferred dividends		1,000,000		700,000		500,000
Common dividends		3,300,000		3,300,000

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-declinedincreasedItem 4 each year, which indicates the firm's capacity to pay the dividend has -Select-diminishedimprovedItem 5 .