4. Debt (or financial leverage) management ratios Companies have the opportunity to use varying amounts of different sources of financing to acquire their assets, including internal and external sources, and debt (borrowed) and equity funds. Aunt Dottie's Linen Inc. reported no long-term debt in its most recent balance sheet. A company with no debt on its books is referred to as: O a company with financial leverage, or a leveraged company a company with no financial leverage, or an unleveraged company Which of the following is true about the leveraging effect? Under economic growth conditions, firms with relatively more financial leverage will have higher expected returns. Under economic growth conditions, firms with relatively low financial leverage will have higher expected returns. Purple Panda Products Inc. has a total asset turnover ratio of 3.00, net annual sales of $25,000,000, and operating expenses of $18,750,000 (including depreciation and amortization). On its current balance sheet and income statement, respectively, it reported total debt of $3,854,167, on which it pays 11% interest on its outstanding debt. To analyze a company's financial leverage situation, you need to measure the firm's debt management ratios. Based on the preceding information, what are the values for Purple Panda's debt management ratios?(Note: Round your answers to two decimal places.) $46.25 $1.03 Ratio Debt ratio Times-interest-earned ratio $1.20 $0.86 Purple Panda Products Inc. raises around from creditors for each dollar of equity. Influenced by a firm's ability to make interest payments and pay back its debt, if all else is equal, creditors would prefer to give loans to companies with times-interest-earned ratios (TIE)