The following data were taken from the financial statements of Starr Construction Inc. for December 31, 20Y6
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Question:
The following data were taken from the financial statements of Starr Construction Inc. for December 31, 20Y6 and 20Y5:
| Dec. 31, 20Y6 | Dec. 31, 20Y5 | |
|---|---|---|
| Accounts payable and other liabilities | $1,700,000 | $2,325,000 |
| Current maturities of bonds payable | 500,000 | 500,000 |
| Serial bonds payable, 8%, issued 2008, due in five years | 5,000,000 | 5,500,000 |
| Common stock, $5 par value | 250,000 | 250,000 |
| Paid-in capital in excess of par | 1,500,000 | 1,500,000 |
| Retained earnings | 10,250,000 | 7,500,000 |
The portion of the 8% serial bonds that come due in the following year are listed in the table above as current maturities; the remaining bonds are reported as serial bonds payable. The income before income tax was $2,816,000 and $2,640,000 for the years 20Y6 and 20Y5, respectively.
a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place.
b. Determine the number of times the bond interest charges are earned during the year for both years. Round to one decimal place.
Expert Answer:
a Determine the ratio of liabilities to stockholders equity at the end of each year Round to one d... View the full answer
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