case#259934826-Finance.docx

case#259934826-Finance.docx - Running Head LEVERAGE...

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Running Head: LEVERAGE ANALYSIS 1 Leverage Analysis: McPherson Limited Name Date
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LEVERAGE ANALYSIS 2 Leverage Ratios v/s Industry Average Based on our calculation, we can see that throughout the 5-year time period, leverage ratios of McPherson are higher than the industry average. For instance, considering long-term debt to total asset ratio, while the average ratio of the company is 0.25 during the five year period, the industry average is merely 0.08. Similarly, the average long-term debt to total equity ratio of the company was estimated at 0.60, while the industry average was estimated at 0.17. This confirms that in comparison to the industry average, McPherson Limited is operating with higher leverage. Leverage Ratios v/s Industry Competitor In order to compare the leverage ratios of McPherson with that of a competitor in the same industry, we have selected Breville Limited, because of all the companies, Breville has the most nearest asset balance compared to the asset balance of McPherson as of 2016. Comparing
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