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You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): Firm A Debt 497.8 Firm
You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): Firm A Debt 497.8 Firm B 80.4 Book Equity 295.4 35.4 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 interest coverage ratio of each firm? Market Equity 401.5 d. Which firm will have more difficulty meeting its debt obligations? 41.3 Operating Income Interest Expense 100.2 8.2 48.8 6.5 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.) The market debt-to-equity ratio for Firm B is (Round to two decimal places.) b. What is the book debt-to-equity ratio of each firm? The book debt-to-equity ratio for Firm A is (Round to two decimal places.) The book debt-to-equity ratio for Firm B is (Round to two decimal places.) c. What is the interest coverage ratio of each firm? The interest coverage ratio for Firm A is (Round to two decimal places.) (Round to two decimal places.) The interest coverage ratio for Firm B is d. Which firm will have more difficulty meeting its debt obligations? (Select from the drop-down menu.) will have more difficulty meeting its debt obligations.
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