The following information is available for the Maine Company and the Iowa Company.

	Maine Company	Iowa Company
Total assets	$695,000	$151,000
Total liabilities	417,000	106,000
Stockholders equity	278,000	45,000
Net income	41,000	10,000

Required

a. For each company, compute the debt-to-assets ratio and the return-on-equity ratio.

b. Determine what percentage of each companys assets were financed by the owners.

c. Which company has the greatest level of financial risk?

d. Based on profitability alone, which company performed better?

e. Do the preceding ratios support the concept of financial leverage? For each company, compute the debt-to-assets ratio and the return-on-equity ratio. (Round your answers to 1 decimal place.)

	Maine		Iowa
Debt to assets ratio		%		%
Return on equity ratio		%		%