Ratio of Liabilities to Stockholders' Equity and Number of Times Interest Charges are Earned
The given data were taken from financial statements of Weal Construction Inc. for December 31, 2014 and 2013:
|
Dec. 31, 2014 |
Dec. 31, 2013 |
| Accounts payable |
$666,000 |
|
$199,000 |
|
| Current maturities of serial bonds payable |
440,000 |
|
440,000 |
|
| Serial bonds payable, 10%, issued 2009, due 2019 |
1,840,000 |
|
2,280,000 |
|
| Common stock, $1 par value |
100,000 |
|
130,000 |
|
| Paid-in capital in excess of par |
1,080,000 |
|
1,080,000 |
|
| Retained earnings |
3,730,000 |
|
2,960,000 |
|
Income before income tax was $843,600 and $738,200 for years 2014 and 2013, respectively.
i) Find ratio of liabilities to stockholders' equity at the end of every year.
ii) Find number of times bond interest charges are earned during year for both years.
iii) Ratio of liabilities to stockholders' equity has and number of times bond interest charges were earned has from 2013 to 2014. The results are combined result of the income before income taxes and serial bonds payable in year 2014 compared to 2013.