Answer:
0.57 and 9.24 times
Explanation:
The computation is shown below:
a. Debt to equity ratio
= Total Liabilities ÷ Share holders' equity
= $2,400,000 ÷ $4,200,000
= 0.57
And, the times interest earned ratio is
= EBIT ÷ interest expense
where,
EBIT is
= Net income + taxes + interest
= $496,500 + $203,500 + $85,000
= $785,000
And, the interest expense is $85,000
So, times interest earned ratio is
= $785,000 ÷ $85,000
= 9.24 times
We simply applied the above formulas
Plus the year is 2019 not 2016
