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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
You are analyzing the leverage of two firms and you note the following (all values in millions of dollars) Debt Firm A Firm B 498.4 79.7 Book Equity 297.7 36.8 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? d. Which firm will have more difficulty meeting its debt obligations? Market Equity 404.4 39.3 C Operating Income 99.3 8.5 Interest Expense 48.1 7.2 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? I (Round to 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 The interest coverage ratio for Firm B is (Round to two decimal places.) (Round to two decimal places.) The interest coverage ratio for Firm B is (Round to two decimal places.) I 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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