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Thornton Manufacturing has total assets of $8,400,000 and total equity of $3,500,000. The industry average debt-to-equity ratio is 1.25. Calculate Thornton's debt-to-equity ratio and determine whether the company has higher or lower default risk compared to industry peers.

Thornton Manufacturing has total assets of $8,400,000 and total equity of $3,500,000. The industry average debt-to-equity ratio is 1.25. Calculate Thornton's debt-to-equity ratio and determine whether the company has higher or lower default risk compared to industry peers.

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 8P
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Thornton Manufacturing has total assets of $8,400,000 and total equity of $3,500,000. The industry average debt-to-equity ratio is 1.25. Calculate Thornton's debt-to-equity ratio and determine whether the company has higher or lower default risk compared to industry peers.
Transcribed Image Text:Thornton Manufacturing has total assets of $8,400,000 and total equity of $3,500,000. The industry average debt-to-equity ratio is 1.25. Calculate Thornton's debt-to-equity ratio and determine whether the company has higher or lower default risk compared to industry peers.
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