Question

You are analyzing the leverage of two firms and you note the following​ (all values in millions of​ dollars): Debt Book Equity Market Equity Operating Income Interest Expense Firm A 502.6 302.1 401.4 99.2 51.6 Firm B 79.4 35.7 40.9 7.7 7.4 a. What is the market​ debt-to-equity ratio of each​ firm? b. What is the book​ debt-to-equity ratio of each​ firm? c. What is the interest coverage ratio of each​ firm? d. Which firm will have more difficulty meeting its debt​ obligations?

Answer 1

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