Using the information for Obras, Inc., in SE 4 and SE 5, compute the debt to equity ratio and the interest coverage ratio for 20x8 and 20x9. Comment on the results. (Round computations to one decimalplace.)

Transcribed Image Text:

Obras, Inc. Comparative Income Statements For the Years Ended December 31, 20x9 and 20x8 20x9 20x8 Net sales Cost of goods sold Gross margin Operating expenses Operating income Interest expense Income before incomaxs Income taxes expense Net income Earnings per share 360,000 $290,000 224,000 176,000 136,000 $114,000 60,000 56,000 54,000 80,000 14.000 10,00 14,000 42,000 44,000 16,000 28,000 28,000 5 2.80 2.80 Obras, Inc. Comparative Balance Sheets December 31, 20x9 and 20x8 20x9 20x8 Assets Current assets Property, plant, and equipment (net) Total assets 48,000 40,000 260,000 200,000 S308,000 $240,000 Ltabilitles and Stockholders' Equity Current liabilities Long-term liabilities Stockholders' equity 36,000 44,000 180,000 120,000 76,000 Total tiabilities and stockholders' equity $308,000 $240,000 92,000