Leverage refers to how much debt a company has in its capital structure. Capital structure refers to the way a firm chooses to finance its business, i.e., what proportion of its total capital (debt and equity) is in debt and what proportion is in equity. The most highly leveraged company is the company with the greatest proportion of debt in its capital structure. Cooper is not the most highly leveraged of the four corporations.
Leverage refers to how much debt a company has in its capital structure. Capital structure refers to the way a firm chooses to finance its business, i.e., what proportion of its total capital (debt and equity) is in debt and what proportion is in equity. The most highly leveraged company is the company with the greatest proportion of debt in its capital structure. Warwick is not the most highly leveraged of the four corporations.
Leverage refers to how much debt a company has in its capital structure. Capital structure refers to the way a firm chooses to finance its business, i.e., what proportion of its total capital (debt and equity) is in debt and what proportion is in equity. The most highly leveraged company is the company with the greatest proportion of debt in its capital structure. Looking at the percentages of long-term debt for the four companies, we see that Sterling has 40% of its capital structure in debt, Cooper has 35%, Warwick has 30%, and Pane also has 30%. Based on that, Sterling is the most highly leveraged corporation. Leverage can also include short-term debt, because short-term debt is also used to fund assets. Whether short-term debt is included or not really depends on the facts given. Here, the percentages of short-term debt have been included in the calculation of 100% of the firms' capital structures, so it would be best to include short-term debt in the calculation of debt in the capital structure. When we sum the short-term and long-term debt for each company, we see that Sterling has 50% debt, Cooper has 45% debt, Warwick has 45% debt, and Pane has 40% debt. Using both short-term and long-term debt, Sterling is again the most highly leveraged of the four corporations.
Leverage refers to how much debt a company has in its capital structure. Capital structure refers to the way a firm chooses to finance its business, i.e., what proportion of its total capital (debt and equity) is in debt and what proportion is in equity. The most highly leveraged company is the company with the greatest proportion of debt in its capital structure. Pane is not the most highly leveraged of the four corporations.
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Which corporation is the most highly leveraged?
