Two firms have sales of $1 million each. Other financial information is as follows:

Firm A Firm B EBIT $150,000 $150,000 Interest expense 20,000 75,000 Income tax 50,000 30,000 Equity 300,000 100,000

What are the operating profit margins and the net profit margins for these two firms? What is their return on equity? Why are they different? If total assets are the same for each firm, what can you conclude about their respective uses of debt financing? SHOW WORK