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Proton and Neutron are competitors in the scientic toy industry. Neutron has been manufacturing educational toys for the last 50 years, and been through many economic cycles. As a result, Neutron management is regarded as conservative with respect to leverage. Management knows how difcult business gets when consumer spending slows. Their main competitor, Proton, on the other hand, is a new entrant to the toy market and has grown sales rapidly mainly through acquiring smaller companies. As a result of this acquisition strategy, Proton has acquired a lot more debt over the last few years. Below are the capital structures of the two toy companies: Debt @ 10% Debt @10% Common Stock Common Stock Common Shares