nge P3-20 (similar to) Question Help The relationship between financial leverage and profitability Pelican Paper, Inc. and Timberland Forest, Inc. are rivals in the manufacture of craft papers. Some financial statement values for each company follow Use them in a ratio analysis that compares the firms financial leverage and profitability. a. Calculate the following debt and coverage ratios for the two companies Discuss their financial risk and ability to cover the costs in relation to each other (1) Debt ratio Vorked (2) Times interest earned ratio b. Calculate the following profitability ratlos for the two companies. Discuss their profitability relative to each other ent Scor (1) Operating profit margin (2) Net profit margin empts (3) Return on total assets (4) Return on common equity c. In what way has the larger debt of Timberland Forest made it more profitable than Pelican Paper? What are the risks that Timberland's investors undertake when they choose to purchase its stock instead of Pelican's? - Question. The debt ratio for Pelican is % (Round to one decimal place) jestio x Question Jestion OK This course in Enter your answer in the answer box and then click Check Answer 14 parts remaining Clear All Check AS i Data Table -X Click the icon here in order to copy the contents of the data table below into a spreadsheet) 6 un Item Total assets Total equity (all common) Total debt Annual interest Total sales EBIT Earnings available for common stockholders Pelican Paper, Inc. $10.700.000 10.100.000 600.000 60.000 24 000 000 6.000.000 Timberland Forest, Inc. $10 700,000 5.400 000 5,300,000 530,000 24,000,000 6 000 000 3.542.400 3,312.000 Print Done swer in the answer box and then click Check Answer ing Clear All Check