The following information pertains to Austin, Inc. and HustonCompany:
| Account Title | | Austin | | Huston | |
| Current assets | | $ | 65,000 | | | $ | 75,000 | | |
| Total assets | | | 400,000 | | | | 580,000 | | |
| Current liabilities | | | 22,750 | | | | 37,500 | | |
| Total liabilities | | | 270,000 | | | | 452,500 | | |
| Stockholders’ equity | | | 240,000 | | | | 127,500 | | |
| Interest expense | | | 16,800 | | | | 19,700 | | |
| Income tax expense | | | 33,600 | | | | 29,800 | | |
| Net income | | | 80,000 | | | | 82,200 | | |
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Required
a-1. Compute each company’s debt-to-assets ratio,current ratio, and times interest earned (EBIT must becomputed).
Compute each company’s return-on-equity ratio andreturn-on-assets ratio. Use EBIT instead of net income whencomputing the return-on-assets ratio.
