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You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt,
You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $32.50 million in assets with $30.25 million in debt and $2.25 million in equity. LotsofEquity, Inc. finances its $32.50 million in assets with $2.25 million in debt and $30.25 million in equity.
Calculate the debt ratio. (Round your answers to 2 decimal places.) |
Debt ratio | |
Lots of Debt | % |
Lots of Equity | % |
Calculate the equity multiplier. (Round your answers to 2 decimal places.) |
Equity multiplier | |
Lots of Debt | times |
Lots of Equity | times |
Calculate the debt-to-equity. (Round your answers to 2 decimal places.) |
Debt-to-equity | |
Lots of Debt | times |
Lots of Equity | times |
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