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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)

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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. Company A uses long-term debt to finance its assets, and company B uses capital generated from shareholders to finance its assets. Which company would be considered a financially leveraged firm? Company B Company A Which of the following is true about the leveraging effect? Using financial leverage reduces a firm's potential for gains and losses. Using financial leverage can generate shareholder wealth, but if a company foils to make the interest and principal payments on its debt, credit default can reduce shareholder wealth. Chilly Moose Fruit Producer has a total asset turnover ratio of 8.00 , 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 $1,601,562, on which it pays 7% interest on its outstanding debt. To anabze a company's financial leverage situation, you need to measure the firm's debt management ratios. Chilly Moose Fruit Producer has a total asset turnover ratio of 8.00 , 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 $1,601,562, on which it pays 7% 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 Chilly Moose fruit's dobt management ratios? (Note: Round your answers to bwo decimal places.) Chilly Moose fruit Producer roises 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 debt ratios

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