12-11A. (Assessing Leverage Use) Some financial data for three corporations are displayed below:

Industry

Measure Firm A Firm B Firm C Norm

Debt ratio 15% 20% 35% 25%

Times burden covered 9 times 11 times 6 times 9 times

Price/earnings ratio 10 times 12 times 5 times 10 times

a. Which firm appears to be excessively levered?

b. Which firm appears to be employing financial leverage to the most appropriate degree?

c. What explanation can you provide for the higher price/earnings ratio enjoyed by firm B as compared with firm A?

Industry

Measure Firm A Firm B Firm C Norm

Debt ratio 15% 20% 35% 25%

Times burden covered 9 times 11 times 6 times 9 times

Price/earnings ratio 10 times 12 times 5 times 10 times

a. Which firm appears to be excessively levered?

b. Which firm appears to be employing financial leverage to the most appropriate degree?

c. What explanation can you provide for the higher price/earnings ratio enjoyed by firm B as compared with firm A?

### Recently Asked Questions

- Please help me to analyze a number of continuous and discrete-time sinusoids using MATLAB. Please post MATLAB coding and plotting signals as well.

- Use the linear approximation formula to approximate e 2.1 a. e 2.1 â 8.1661699 b. e 2.1 â ï»¿ \frac{11e^2}{10} ï»¿ c. e 2.1 â e 2 d. e 2.1 â ï»¿

- Which of the following statements about the odds ratio is NOT true? Question 5 options: It can be any non-negative number. The sample odds ratio can be