At the end of 2016 the following information is available for Delaware Company and Florida Company:

Required
a. For each company, compute the debt to assets ratio and the return on equity ratio.
b. Determine what percentage of each company€™s assets were financed by the owners.
c. Which company has the greatest level of financial risk?
d. Based on profitability alone, which company performed better?
e. Do the above ratios support the concept of financial leverage? Explain.

Delaware Co. Florida Co. $127,000 $753,000 452,000 Total assets Total liabilities Stockholders' equity Net income 93,000 4000 301,000 8,000 45,000