The most recent financial statement for a large Canadian furniture and appliance rental chain show that its debt ratio was 0.256 and its debt-to-equity ratio (D/E) was 0.073. At the end of year 2, was Finns’ Fridges more or less leveraged than this major competitor?

Finns’ Fridges is a company created by twin brothers David and Douglas Finn, who rented small refrigerators to other students in their college dormitory. Use the following statements to answer the questions about Finns’Fridges.

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Balance Sheet for Finns' Fridges (End of the year indicated) Year 1 ($) Year 2 (S) Assets Cash Property and equipment (net) Total assets Liabilities and Owners' Equity Interest payable Tax payable Dividends payable Long-term debt Total liabilities Common shares Retained earnings Total owners' equity Total liabilities and owners' equity 1,150 3,840 4,990 493 3,888 4,381 160 182 210 2,400 2,952 1,000 429 1,429 4,381 200 200 3,200 3,777 1,000 213 1,213 4,990 Income Statement for Finns' Fridges (For the full year indicated) Year 1 (S) Year 2 ($) 2,200 220 Revenues (net of bad debts) Selling and administrative expenses Loss (stolen equipment) EBITDA Amortization expense EBIT Interest expense Earnings before tax Tax (30%) Net income Earnings per share (100 shares) Dividends per share 1,950 0 160 1,790 1,000 790 200 590 0 1,980 1,212 768 160 608 182 426 4.26 2.10 413 4.13 2.00