Although a certain amount of debt can benefit a firm's shareholders by allowing the firm to shelter some of its income from taxes, too much debt can increase the risk of bankruptcy, and destroy shareholder value.

Please answer the following:

1. Find a well-known publicly traded U.S. firm that has recently filed for bankruptcy i.e. within the (past few years), and make note of the date/year of the bankruptcy.

2. Now, find historical information regarding the firm's debt ratio:

a) Find the firm you are interested in by using the search box.

b) After clicking on the link for your firm, click on Company Financials, and then on the Ratios tab.

c) Increase the number of annual data to 15 (and click refresh).

d) Scroll down to the Debt Management section, and find the Total Debt to Equity (i.e. D/E) ratio for at least five years before the bankruptcy.

e) You can now find the Total Debt ratio (D / (D + E)) as:   Total Debt ratio = (D/E)  /  (1+ D/E) 

3. Compare the Total Debt ratio of your firm in the year prior to bankruptcy, to the average total debt ratio in its Industry. How does it compare? Is it similar or very different? (Note: you can obtain the current industry average total debt ratio from the Excel file attachment for the Chapter 12 Discussion topic - it's the column to the left of the industry average WACC).

4. Does it look like your firm has been maintaining a target debt ratio (i.e. more or less equal from one year to the next), or do you see a significant change over time? Discuss. 

5. Based on what you observe about the firm's total debt ratio (changes over time and especially in comparison to its industry), do you believe that the firm's bankruptcy was related to its debt ratio (i.e. financial risk), or to some other aspect of its business (i.e. business risk)? 

 Make sure to include references for all your sources.