The extent of financial leverage in a firm Debt ratlos measure the proportion of total assets financed by a firm's creditors. Hackworth co. has a debt-to-equity ratio of 2.80, compared to the industry average of 2.24. Its competitor Merkum's Co., however, has e debt-to- equity ratio of 4.20. Based on what debt-to-equity ratios imply, which of the following statements is true? Markum's Co.'s creditors face lesser risk than the average financial risk in the industry. O Markur's Co. has higher creditworthiness as compared to Hackworth Co. Markum's Co. has greater financial risk as compared to Hackworth Co. and to the average financial risk in the industry Hackworth Co.'s shareholders expect magnified returns but higher risk as compared to Markum's Co. o Suppose the stock price of Hackworth Co. falts by 10%. What impact will it have an its market-to-debt ratio ir nothing changes in the 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 increase, reflecting a decrease 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 ratio will decrease, reflecting an increase in the financial risk of the company Data Collected (Millions of dollars) Year 1 EBITDA $900 Interest payments $90 Principal payments $72 4.43 Lease payments $41 7.18 4.64 Hackworth Cou reported the following figures in its annual report. 5.81 Based on the information, Hackworth Co. has the ability to cover its fixed financial charges times