Company A and Company B are competitors in the fashion industry. Both companies have faced significant competition over recent years. Their financial data are as follows: Company A Company B Profit Before Interest and Tax (PBIT) 120,000,000 120,000,000 Finance Charges 80,000,000 15,000,000 Using the provided financial data, assess the impact of financial leverage on the financial risk of each company. Your analysis should include: 1. A brief explanation of financial leverage and how it can affect a company's financial risk. MBAC 813: Financial Management | Exam 2nd opp | Part-time 5/6 2. A calculation of the degree of financial leverage for each company. 3. A comparison of the two companies in terms of their financial risk due to leverage. Ensure that you justify your conclusions with your calculations and conceptual understanding of financial leverage. (8) Hint: Remember that financial leverage relates to a company's mix of debt and equity financing, and how this mix can magnify the potential return of an investment — but also the risk.