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What is the book debt-to-equity ratio of each firm?

You are analyzing the leverage of two firms and you note the following (all values in millions of dollars):

Debt Book Equity Market Equity EBIT Interest Expense
Firm A 500 300 400 100 50
Firm B 80 35 40 8 7

a. What is the market debt-to-equity ratio of each firm?

b. What is the book debt-to-equity ratio of each firm?

c. What is the EBIT/interest coverage ratio of each firm?

d. Which firm may have more difficulty meeting its debt obligations? Explain.

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