The following information is available from the balance sheets at the ends of the two most recent years and the income statement for the most recent year of Impact Company:

Other Information
a. Short-term notes payable represents a 12-month loan that matured in November 2017. Interest of 12% was paid at maturity.
b. One million dollars of serial bonds had been issued ten years earlier. The first series of $200,000 matured at the end of 2017, with interest of 8% payable annually.
c. Cash flow from operations was $185,000 in 2017. The amounts of interest and taxes paid during 2017 were $89,000 and $96,000, respectively.
Required
1. Compute the following for Impact Company:
a. The debt-to-equity ratio at December 31, 2017, and December 31, 2016
b. The times interest earned ratio for 2017
c. The debt service coverage ratio for 2017
2. Comment on Impact's solvency at the end of 2017. Do the times interest earned ratio and the debt service coverage ratio differ in their indication of Impact's ability to pay its debts? Explain.

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December 31 2017 2016 Accounts payable Accrued liabilities Taxes payable Short-term notes payable Bonds payable due within next year S 65,000 50,000 35,000 45,000 75,000 200,000 S 405,000 $ 800,000 $1,000,000 1,000,000 500,000 $1,500,000 $2,705,000 25,000 60,000 200,000 350,000 $ 600,000 Total cument liabilities Bonds payable Common stock, $10 par Retained earnings 650,000 $1,650,000 $2,600,000 Total stockholders' equity Total liabilities and stockholders' equity 2017 $1,600,000 950,000 S 650,000 300,000 $ 350,000 89,000 $ 261,000 111,000 S 150,000 Sales revenue Cost of goods sold Gross profit Selling and administrative expense Interest expense Income tax expense Operating income Income before tax Net income