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You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): Debt Firm A Firm B 498.2
You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): Debt Firm A Firm B 498.2 76.4 Book Equity 302.1 30.8 Market Equity 401.1 41.7 Operating Income 108.4 7.6 Interest Expense 46.6 7.4 a. What is the market debt-to-equity ratio of each firm? b. What is the book debt-to-equity ratio of each firm? c. What is the EBIT/interest coverage ratio of each firm? d. Which firm may have more difficulty meeting its debt obligations? Explain. a. What is the market debt-to-equity ratio of each firm? The market debt-to-equity ratio for Firm A is . (Round to two decimal places.)
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