The advantages of long-term debt to the issuer and the investor Long-term debt offers advantages and disadvantages to the issuing firm and to the investor in debt securities. Examine the following two statements and indicate whether each represents an advantage or a disadvantage to the issuer or the investor. Debt holders have a specific agent called a trustee who ensures that terms of the indenture are met. Shareholders do not. Debt securities allow the firm's shareholders to maintain greater control over the firm. Does the preceding statement indicate an advantage or a disadvantage to the issuer or the investor in debt financing? Advantage to the investor Advantage to the issuer Does the preceding statement indicate an advantage or a disadvantage to the issuer or the investor in debt financing? Advantage to the issuer Disadvantage to the issuer Does the use of debt financing increase the issuer's earnings per share? Consider the following company data and then answer the questions that follow. Assume that Marston Manufacturing Company generates annual sales of $1, 250,000 using total assets of $500,000. It has an operating profit margin (EBIT/sales) of 45%, a tax rate of 35%, and 100,000 shares of common stock outstanding. These shares have a par value of $5 per share. Currently, the company is financed solely with common stock, but its management is considering selling sufficient debt to bring its debt ratio to 45%. These debt securities, which will carry an interest rate of 15%, will be used to repurchase an equal value of shares of common stock, with the shares valued at their par value. Given this information, answer the questions in the following table