The following information pertains to Tacoma and Olympia companies at the end of 2016:

Required
a. Compute each company€™s debt to assets ratio, current ratio, and times interest earned (EBIT must be computed). Identify the company with the greater financial risk.
b. Compute each company€™s return on equity ratio and return on assets ratio. Use EBIT instead of net income when computing the return on assets ratio. Identify the company that is managing its assets more effectively. Identify the company that is producing the higher return from the stockholders€™ perspective. Explain how one company was able to produce a higher return on equity than the other.

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Account Title Tacoma Co Olympia Co Current assets Total assets Current liabilities Total liabilities Stockholders' equity Interest expense Income tax expense Net income $ 60,000 1,000,000 55,000 800,000 200,000 60,000 95,000 145,000 60,000 1,000,000 50,000 600,000 400,000 45,000 100,000 155,000