Ratio of Liabilities to Stockholders' Equity and Number of TimesInterest Charges are Earned
The following data were taken from the financial statements ofWeal Construction Inc. for December 31 of two recent years:
Current Year Previous Year Accounts payable $375,000 $318,750 Current maturities of serial bonds payable 250,000 290,000 Serial bonds payable, 12%, issued 2009, due 2019 1,160,000 1,390,000 Common stock, $1 par value 80,000 90,000 Paid-in capital in excess of par 780,000 780,000 Retained earnings 2,630,000 2,400,000
The income before income tax was $362,800 and $323,500 for thecurrent and previous years, respectively.
a. Determine the ratio of liabilities tostockholders' equity at the end of each year. Round to one decimalplace.
Current year Previous year
b. Determine the number of times the bondinterest charges are earned during the year for both years. Roundto one decimal place.
Current year Previous year
c. The ratio of liabilities to stockholders'equity has and the number of times bond interest charges wereearned has from the previous year. These results are the combinedresult of a income before income taxes and serial bonds payable inthe current year compared to the previous year.
Ratio of Liabilities to Stockholders' Equity and Number of TimesInterest Charges are Earned
The following data were taken from the financial statements ofWeal Construction Inc. for December 31 of two recent years:
Current Year | Previous Year | |||
Accounts payable | $375,000 | $318,750 | ||
Current maturities of serial bonds payable | 250,000 | 290,000 | ||
Serial bonds payable, 12%, issued 2009, due 2019 | 1,160,000 | 1,390,000 | ||
Common stock, $1 par value | 80,000 | 90,000 | ||
Paid-in capital in excess of par | 780,000 | 780,000 | ||
Retained earnings | 2,630,000 | 2,400,000 |
The income before income tax was $362,800 and $323,500 for thecurrent and previous years, respectively.
a. Determine the ratio of liabilities tostockholders' equity at the end of each year. Round to one decimalplace.
Current year | |
Previous year |
b. Determine the number of times the bondinterest charges are earned during the year for both years. Roundto one decimal place.
Current year | |
Previous year |
c. The ratio of liabilities to stockholders'equity has and the number of times bond interest charges wereearned has from the previous year. These results are the combinedresult of a income before income taxes and serial bonds payable inthe current year compared to the previous year.