Question
Company A has a total market cap of $1 billion and a d/e ratio of 0.75. Company B has a market cap of $750 million
Company A has a total market cap of $1 billion and a d/e ratio of 0.75. Company B has a market cap of $750 million and a d/e ratio of 1.5. Which of the company represents a greater risk to the owner and why?
Step by Step Solution
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Step: 1
To determine which company represents a greater risk to the owner we can compare their debt levels r...
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Corporate Finance
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
3rd Edition
0077173635, 9780077173630
