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

	Maine Company	Iowa Company
Total assets	$704,000	$162,000
Total liabilities	426,000	118,000
Stockholders equity	278,000	44,000
Net income	41,700	9,988

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?

The following information is available for the Maine Company and the lowa Company: Required a. For each company, compute the debt-to-assets ratio and the return-on-equity ratio. b. Determine what percentage of each company's 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? Complete this question by entering your answers in the tabs below. For each company, compute the debt-to-assets ratio and the return-on-equity ratio. (Round your answers to 1 decim 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? Complete this question by entering your answers in the tabs below. Determine what percentage of each company's assets were financed by the owners. (Round your answers to 1