Selected financial data for Georgia-Pacific Corporation, a forest products and paper firm, appear in Exhibit 4.27. Required

Question:

Selected financial data for Georgia-Pacific Corporation, a forest products and paper firm, appear in Exhibit 4.27.

Required
a. In which years did financial leverage work to the advantage of the common shareholders? In which years did it work to their disadvantage? Explain.
b. Identify possible reasons for the changes in the leverage ratio during the five-year period.

Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...