The total liabilities and shareholders’ equity of Weal Construction Ltd. for December 31, 2015 and 2014, are as follows:
The income before income taxes was $720,000 and $560,000 for the years 2015 and 2014, respectively.
a. Determine the debt ratio for both years. Round the percentage to one decimal place.
b. Determine the times interest earned ratio during the year for both years. Round to one decimal place.
c. What conclusions can be drawn from these data regarding the company’s ability to meet its currently maturing debts?