The following information pertains to Tacoma and Olympia companies at the end of 2016: Required a. Compute

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

The following information pertains to Tacoma and Olympia companies at

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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Fundamental Financial Accounting Concepts

ISBN: 978-0078025907

9th edition

Authors: Thomas Edmonds, Christopher Edmonds

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