Below is information for the year 2019 for Company A and Company B.

Interest expense $400 $0

Tax expense (40%) $400 $400

Net income $600 $600

Ending balance of total asset $10,000 $10,000

Total debt $5,000 $0

Equity $5,000 $10,000

Required: Compute the following for Year 2019

(a) Return on assets for Company A and B

(b) Financial leverage ratio for Company A and B

(c) Times interest earned ratio, after necessary adjustments for Company A if it capitalized $100 interest costs in the pension obligation during the year.

(d) Company A has used financial leverage to increase its return to its shareholders. Comment on this statement.