Question: 3 - 5 Debt Management Ratios You are considering a stock investment in one of two firms ( LotsofDebt , Inc., and LotsofEquity, Inc. )

3-5 Debt Management Ratios 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 $30 million in assets with $29 million in debt and $1 million in equity. LotsofEquity, Inc., finances its $30 million in assets with $1 million in debt and $29 million in equity. Calculate the debt ratio, equity multiplier, and debt-to-equity ratio for the two firms. (LG3-3)

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