The following information pertains to Bob€™s Pest Services and Sarah€™s Critter Control 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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Bob's Pest Services Sarah's Critter Control Account Title Current assets Total assets Current liabilities Total liabilities Stockholders' equity Interest expense Income tax expense Net income 45,000 800,000 78,000 675,000 125,000 62,000 69,000 105,000 $ 45,000 800,000 57,000 500,000 300,000 45,000 75,500 115,000