Balance Sheet and Income Statement Data Indicate the Following ​ (A) for Each Company, What Is the Times Interest

Essay

Balance sheet and income statement data indicate the following: $\begin{array}{lrr}&\text { Company A } & \text { Company B } \\\text { Bonds payable, } 8 \%, 24 \text {-year bonds } & \$ 1,200,000 & \$ 900,000 \\\text { Income before income tax for year } & 495,000 & 130,000 \\\text { Income tax for year } & 75,000 & 12,000 \\\text { Interest payable } & 50,000 & 0 \\\text { Interest receivable } & 21,000 & 28,000\end{array}$ ​ (a) For each company, what is the times interest earned ratio? (Round to one decimal place)
(b) Which company gives potential creditors more protection?