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You are comparing two company's leverage ratios. Which of the following statements is correct? Company X Company Y Debt/Equity 2.48 1.36 Interest Coverage 4.85 5.95

You are comparing two company's leverage ratios. Which of the following statements is correct?

Company X Company Y
Debt/Equity 2.48 1.36
Interest Coverage 4.85 5.95

Group of answer choices

a.Company X has a strength in leverage ratios since it uses more debt and has lower ability to pay interest expense.

b,Company Y has a strength in leverage ratios since it uses less debt and has higher ability to pay interest expense.

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