Principles of Finance 3

200 words each:

Discussion Prompt #1 - The more debt a firm uses, the greater its financial leverage, which magnifies both risk and return. Discuss the relationship between debt and financial leverage and the ratios used to analyze a firm’s debt. In your response, choose a public-traded company and review their latest annual report. Provide a summary of the comments that are made regarding the company’s debt and financial leverage. Your responses should include at least two peer-reviewed sources for support of your findings.

Discussion Prompt #2 - Ratio analysis enables stockholders, lenders, and the firm’s managers to evaluate the firm’s financial performance. For this discussion, choose one of these stakeholders and discuss examples of how they use ratios to make decisions regarding the organization.