Chapter 24 – Financial Statement Analysis & Case (Part 3)

1. Identify the company that has the greatest amount of financial leverage in its capital structure based on the Long-term debt / equity ratio. State the ratio’s value.

2. For the company you identified above in 1, also state its total liabilities to total assets percentage, and its total equity to total assets percentage (common size data). These two percentages add to 100%.

3. In chapter 9 in Finkler’s discussion of financial leverage (pp. 91-92) he explains that companies can increase return on equity by using financial leverage, albeit with some risk since volatility of yield is increased. Verify that the company you have identified in this assignment is one of the highest companies in return on equity (from Part 1).

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Chapter 24 – Financial Statement Analysis & Case (Part 4)

Based on company descriptions in the Health Products industry, which company, Company A or Company B, is the manufacturer of pharmaceuticals and hospital supplies? Which Company, A or B, is the manufacturer of name-brand consumer products? Select 2-3 data items to support your conclusion. Explain how these data items differentiate the two companies and support your conclusion as to the identify of each company.