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

Spaling Preston

EBIT (Earnings before interest and taxes)300,000 190,000

Interest expense A 15,000

Net income 200,000 J

Dividend payout ratio35% K

Retention ratioB 60%

Dividends declared during the yearC 40,000

Sales3,000,000 L

Average assets during the yearD 1,500,000

Average debt during the year700,000 M

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

Asset turnover ratioE 1.3333

Debt ratio F 0.3333=1/3

Return on salesG 0.095

Return on assets 0.12 O

Return on equityH 0.10

Market price per share, beginning of year20 P

Market price per share, end of year15 20

Total shareholder returnI 0.1556

Number of shares outstanding150,000 50,000

Times interest earned30 Q