An investment is considering investing in the long-term bonds and common stock of Companies P and R. Both firms operate in the same industry. Both also pay a dividend per share of $8 and have a yield of 10 percent on their long-term bonds. Other date for the two firms are as follows:

Compute the debt to equity ratio, interest coverage ratio, and price/earnings (P/E) ratio, as well as the dividends yield, and comment on the results.

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Toral assets Toral liabilities Income before income taxcs Interest expense Earnings Market price of common stock Company P $2,400,000 1,080,000 288,000 97,200 3.20 40.00 CompanyR $1,080,000 594,000 129,600 53,460 5.00 47.50 per share