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Total assets Total liabilities Stockholders' equity Net income Debt to assets ratio Return on equity ratio Maine Company $695,000 $417,000 $278,000 $41,000 Required a. For each company, compute the debt-to-assets ratio and the return-on-equity ratio. (Use cell references from the given information to complete this question.) Maine lowa Maine lowa Company $151,000 % % $106,000 $45,000 $10,000 b. Determine what percentage of each company's assets were financed by the owners. % % lowa c. Which company has the greatest level of financial risk? % %

Total assets Total liabilities Stockholders' equity Net income Debt to assets ratio Return on equity ratio Maine Company $695,000 $417,000 $278,000 $41,000 Required a. For each company, compute the debt-to-assets ratio and the return-on-equity ratio. (Use cell references from the given information to complete this question.) Maine lowa Maine lowa Company $151,000 % % $106,000 $45,000 $10,000 b. Determine what percentage of each company's assets were financed by the owners. % % lowa c. Which company has the greatest level of financial risk? % %

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 49E
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The following information is available for the Maine Company and the lowa Company. Maine Company $695,000 $417,000 $278,000 $41,000 Total assets Total liabilities Stockholders' equity Net income Debt to assets ratio Return on equity ratio Required a. For each company, compute the debt-to-assets ratio and the return-on-equity ratio. (Use cell references from the given information to complete this question.) Maine lowa Company $151,000 % % $106,000 $45,000 $10,000 lowa c. Which company has the greatest level of financial risk? d. Based on profitability alone, which company performed better? e. Do the above ratios support the concept of financial leverage? % % b. Determine what percentage of each company's assets were financed by the owners. Maine lowa % %
Transcribed Image Text:The following information is available for the Maine Company and the lowa Company. Maine Company $695,000 $417,000 $278,000 $41,000 Total assets Total liabilities Stockholders' equity Net income Debt to assets ratio Return on equity ratio Required a. For each company, compute the debt-to-assets ratio and the return-on-equity ratio. (Use cell references from the given information to complete this question.) Maine lowa Company $151,000 % % $106,000 $45,000 $10,000 lowa c. Which company has the greatest level of financial risk? d. Based on profitability alone, which company performed better? e. Do the above ratios support the concept of financial leverage? % % b. Determine what percentage of each company's assets were financed by the owners. Maine lowa % %
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