Use the financial statements of Gagnon, Inc., in SI 3-6 and S13-7.
1. Compute the company's debt ratio at December 31, 2016.
2. Compute the company's times"-interest-earned ratio for 2016. For operating income, use in¬come before both interest expense and income taxes. You can simply add interest expense back to income before taxes.
3. Is Gagnon's ability to pay liabilities and interest expense strong or weak? Comment on the value of each ratio computed for questions 1 and 2.