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(Assessing leverage use) Financial data for three corporations are displayed here: a. Which firm appears to be excessively leveraged? b. Which firm appears to be

(Assessing leverage use) Financial data for three corporations are displayed here: a. Which firm appears to be excessively leveraged? 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? Data table MEASURE Debt ratio Times interest earned Price/earnings ratio Fa FIRM A 10% 11 times 12 times FIRM B 15% 13 times 14 times FIRM C 30% 10 times 9 times X
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(Assessing leverage use) Financial data for three corporations are displayed here: a. Which firm appears to be excessively leveraged? 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 compare with firm A? Data table

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