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Consider the Total Debt to Total Capital ratios for the following four companies: Company A = 0.9, Company B = 0.7, Company C = 0.5,

Consider the Total Debt to Total Capital ratios for the following four companies:

Company A = 0.9, Company B = 0.7, Company C = 0.5, Company D = 0.2.

Which company is using the most financial leverage?

Assume the Profit Margin is 3%, Total Asset TurnOver is 3x and the Equity Multiplier is 1.5. What is Return On Assets: 9%, 3%, or 1% ?

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