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stranahan stranahan
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2 years ago
The debt-to-equity ratios for Firm 1, Firm 2, Firm 3, and Firm 4 are 0.25, 0.35, 0.35, and 0.45, respectively. The earnings per share for Firm 1, Firm 2, Firm 3, and Firm 4 are $4.5, $3.5, $3, and $2.5, respectively. Generally speaking,which firm is placing fewer burdens on its borrowing?
A) Firm 1
B) Firm 2
C) Firm 3
D) Firm 4
Textbook 

Financial Management: Core Concepts


Edition: 2nd
Author:
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UnluckyGirlXOXUnluckyGirlXOX
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Posts: 232
2 years ago
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A -- Generally speaking, a company places fewer burdens on its borrowing when it has a lower debt/equity ratio and higher earnings per share. Thus, Firm 1 is placing fewer burdens on its borrowing
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