nalysis of Financial Statements ded Assignment Read Chapter 3 Back to Assignment Due Saturday 05.13.17 at 10:45 PM Attempts Average: 13 5. More on debt management ratios Aa Aa The extent of financial leverage in a firm Debt ratios measure the proportion of total assets financed by a firm's creditors. Mitata co. has a debt-to-equity ratio of 1.00, compared to the industry average of 0.80. Its competitor Burlingame Co., however, has a debt-to-equity ratio of 1.50. Based on what debt-to-equity ratios imply, which of the following statements is true Q Burlingame Co. has higher creditworthiness as compared to Mitata Co. Q Mitata Co.'s shareholders expect magnified returns but higher risk as compared to Burlingame Co. Q Burlingame Co. has greater financial risk as compared to Mitata co. and to the average financial risk in the industry O Burlingame Co.'s creditors face lesser risk than the average financial risk in the industry. Suppose the stock price of Mitata Co. falls by 10%. What impact will i have on its market-to-debt ratio if nothing changes in the company's balance sheet? Q The market debt ratio will increase, reflecting a decrease in the financial risk of the company. Q The market debt ratio will decrease, reflecting a decrease in the financial risk of the company. Q The market debt ratio will increase, reflecting an increase in the financial risk of the company. Q The market debt ratio will decrease, reflecting an increase in the financial risk of the company. Data Collected Mitata Co. reported the following figures in its annual (Millions of dollars) Year 1 Based on the information, Mitata Co. has the ability to $200 Interest payments $20 cover its fixed financial charges Principal payments $16 Lease payments Grade Now