Use the information in the table below to calculate the following ratios. Discuss the results to compare the financial positions of the two firms:

Complete the empty frames in the following table and show your work below (identify calculations by letter). For example, Spaling's interest expense can be inferred from EBIT and Times interest earned, since TIE = EBIT / Interest expense.

Calculation for A:

EBIT = 300,000, TIE = 30, so 30 = 300,000 / Interest expense, and Interest expense = 300,000 / 30 = 10,000

SpalingPreston

EBIT (Earnings before interest and taxes)300,000190,000

Interest expenseA15,000

Net income200,000J

Dividend payout ratio35%K

Retention ratioB60%

Dividends declared during the yearC40,000

Sales3,000,000L

Average assets during the yearD1,500,000

Average debt during the year700,000M

Average shareholders' equity during the year 1,950,000 N

Asset turnover ratioE1.3333

Debt ratio F0.3333=1/3

Return on salesG0.095

Return on assets0.12O

Return on equityH0.10

Market price per share, beginning of year20P

Market price per share, end of year1520

Total shareholder returnI0.1556

Number of shares outstanding150,00050,000

Times interest earned30Q