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The following information pertains to Austin, Inc. and Huston Company: 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...

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Accounting

The following information pertains to Austin, Inc. and HustonCompany:

Account TitleAustinHuston
Current assets$65,000$75,000
Total assets400,000580,000
Current liabilities22,75037,500
Total liabilities270,000452,500
Stockholders’ equity240,000127,500
Interest expense16,80019,700
Income tax expense33,60029,800
Net income80,00082,200


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.

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