5. More on debt management ratios The extent of financial leverage in a firm Debt ratios...

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5. More on debt management ratios The extent of financial leverage in a firm Debt ratios measure the proportion of total asse Data Collected (Millions of dollars) Year 1 EBITDA $150 $15 Interest payments Principal payments $12 Lease payments Fuzzy But

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Answer 1

Answer #1

The company Fuzzy button has greater/higher financial risk as compared to company Cold duck but lower than average financial risk in the industry

Market debt ratio= Market value of equity/ total debt

The market debt ratio will resultantly decrease reflecting the increase in financial risk of the company

150/(15+12+7) = 4.41 times

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5. More on debt management ratios The extent of financial leverage in a firm Debt ratios...

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5. More on debt management ratios Aa Aa E The extent of financial leverage in a...

5. More on debt management ratios Aa Aa E The extent of financial leverage in a...