Question: (Assessing leverage use) Financial data for three corporations are displayed here: a. Which firm appears to be excessively leveraged? b. Which firm appears to be

(Assessing leverage use) Financial data for three corporations are displayed here:

(Assessing leverage use) Financial data for three corporations are displayed here: a. Which firm appears to be excessively leveraged? b. Which firm appears to be employing financial leverage to the most appropriate degree? c. What explanation can you provide for the higher price/earnings ratio enjoyed by firm B as compared with firm A? a wr Data table - (Click on the following icon in order to copy its contents into a spreadsheet.) MEASURE Debt ratio Times interest eamed Price/earings ratio FIRMA 25% 11 times 12 times FIRMB 30% 13 times 14 times FIRMC 45% 10 times 9 times INDUSTRY NORM 25% 12 times 13 times

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