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 firm€™s financial statements:

What does your analysis indicate about the firm€™s capacity to pay preferred stock dividends?

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Year Operating income $12,000,000 $15,000,000 $17,000,000 Interest Taxes Preferred dividends Common dividends 20X1 20X2 20X3 3,000,000 4,000,000 1,000,000 3,000,000 5,900,000 110 5,400,000 1,000,000 2,000,000 11,000,000 4,000,000 1,500,000