2013 market debt-equity c. 2009 debt-enterprise value ratio. 2013 debt-enterprise value ratio. 2-35. Use the data in Problem 8 to determine the change, from 2009 to 2012, in GE’s a. book debt-equity ratio? b. market debt-equity a. 2009 book debt-equity ratio. 2012 book debt-equity . b. 2009 market debt-equity ratio. 2012 market debt-equity ratio . 2-36. You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): a. What is the market debt-to-equity ratio of each firm? b. What is the book debt-to-equity of each firm? c. What is the interest coverage ratio of each firm? d. Which firm may have more difficulty meeting its debt obligations? Explain. a. Firm A:. Firm B:. b. Firm A:. Firm B:. c. Firm A:. Firm B: . Firm B has a lower coverage ratio and will have slightly more difficulty meeting its debt obligations than Firm A. 2-37. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. Compute Mydeco’s PE ratio each year from 2009 to 2013. In which year was it the highest? b. What was Mydeco’s Enterprise Value to EBITDA ratio each year? In which year was it the highest? c. What might explain the differing time pattern of the two valuation ratios? a. The PE ratio was highest in 2010. b. The enterprise value/EBITDA ratio was the highest in 2012. c. The different time patterns are caused by increasing debt in 2012 and 2013 that increased the enterprise value of the Mydeco and reduced the earnings per share due to increased interest expense. In addition, very small earnings per share in 2010 increased the PE ratio even though the price decreased as well.
2013 market debt-equity c. 2009 debt-enterprise value ratio. 2013 debt-enterprise value ratio. 2-35. Use the data in Problem 8 to determine the change, from 2009 to 2012, in GE’s a. book debt-equity ratio? b. market debt-equity a. 2009 book debt-equity ratio. 2012 book debt-equity . b. 2009 market debt-equity ratio. 2012 market debt-equity ratio . 2-36. You are analyzing the leverage of two firms and you note the following (all values in millions of dollars): a. What is the market debt-to-equity ratio of each firm? b. What is the book debt-to-equity of each firm? c. What is the interest coverage ratio of each firm? d. Which firm may have more difficulty meeting its debt obligations? Explain. a. Firm A:. Firm B:. b. Firm A:. Firm B:. c. Firm A:. Firm B: . Firm B has a lower coverage ratio and will have slightly more difficulty meeting its debt obligations than Firm A. 2-37. See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. Compute Mydeco’s PE ratio each year from 2009 to 2013. In which year was it the highest? b. What was Mydeco’s Enterprise Value to EBITDA ratio each year? In which year was it the highest? c. What might explain the differing time pattern of the two valuation ratios? a. The PE ratio was highest in 2010. b. The enterprise value/EBITDA ratio was the highest in 2012. c. The different time patterns are caused by increasing debt in 2012 and 2013 that increased the enterprise value of the Mydeco and reduced the earnings per share due to increased interest expense. In addition, very small earnings per share in 2010 increased the PE ratio even though the price decreased as well.
Solution-Manual-for-Corporate-Finance-The-Core-3rd-Edition-by-Berk.docx