Question 04 (15 Points ) 15 Marks Arohi Ltd and Rainbo Ltd are rivals in the tourism industry. Following is the most recent selected financial data for both companies. Due to covid -19 attack sales of both companeis have been severly affected and Earning went below expected level. Item Rainbo Ltd Arohi Ltd Total Assets Total Equity (Common) Total debt Annual Interest Total Sales EBIT Earnings (for stockholders) 15,000,000 14,250,000 750,000 67,500 24,000,000 532,000 464,500 15,000,000 6,000,000 9,000,000 810,000 24,000,000 532,000 (278,000) 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 (2) Times interest earned ratio b. Calculate the following profitability ratios for the two companies. Discuss their profitability relative to each other. (1) Operating profit margin (2) Return on total assets (3) Return on common equity c. In what way has the larger debt of Arohi Ltd made it less profitable than Rainbo Ltd ? Expalin the impact of capital structure on firms profibility. .Good Luck