The extent of financial leverage in a firm Debt ratios measure the proportion of total assets financed by a firm's' creditors. Cute Camel Woodcraft Company has a debt-to-equity ratio of 3.80 , compared to the industry average of 3.04 , Its competitor Purple Lemon Woodcraters, however, has a debt-to-equity ratio of 5.70 . Based on what debt-to-equity ratios imply, which of the following statements is true? Cute Camel's shareholders expect magnified returns but higher risk as compared to Purple Lemon. Purple Lemon has greater financial risk as compared to Cute Camel and to the average financial risk in the industry: Purple Lemon has higher creditworthiness as compared to Cute Camel. Purple Lemon's creditors face lesser risk than the average financial risk in the industry, Suppose the stock price of Cute Camel Woodcraf Company falls by 10%. What impact will it have on its market debt ratio if nothing changes in the company's balance sheet? The market debt ratio will increase, reflecting an increase in the financial risk of the compamy, The market debt ratio will decrease, reflecting an increase in the financal risk of the company. The market debt ratio will decrease, reflecting a decrease in the financial risk of the company. The market debt ratio will increase, reflecting a decrease in the financial risk of the company. Date Collected (Millions of dollars) company's balance sheet? The market debt ratio will increase, reflecting an increase in the financial risk of the company. The market debt ratio will decrease, reflecting an increase in the financial risk of the company. The market debt ratio will decrease, reflecting a decrease in the financial risk of the company. The market debt ratlo will increase, reflecting a decrease in the financial risk of the company. Cute Camel Woodcraft Compony reported the following figures in its annual report Based on the information, Cute Camel Woodcraft Company has the ability to cover its fixed financial charges virnes