Question
You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): Debt Book Equity Market Equity Operating
You are analyzing the leverage of two firms and you note the following (all values in millions of dollars):
| Debt | Book Equity | Market Equity | Operating Income | Interest Expense | |
| Firm A | 500.9 | 304.4 | 396.3 | 98.5 | 49.2 |
| Firm B | 80.7 | 33.1 | 39.9 | 8.5 | 7.1 |
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?
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Intermediate Accounting
Authors: Kin Lo, George Fisher
3rd Edition Vol. 1
133865940, 133865943, 978-7300071374
