Question 19.1: Informed Judgment about Risk SITUATION: You are given some a...
Informed Judgment about Risk
SITUATION: You are given some additional information about Sleepy Hollow Corporation’s use of financial leverage, as shown:
\begin{matrix} Debt \ to \ total \ assets \ before \ capital \ project &=& \$400/\$600 &=& 66.7\% \\ Debt \ to \ total \ assets \ after \ capital \ project &=& \$660/\$890 &=& 74.2\% \\ Industry \ average \ debt \ to \ total \ assets &=& 40.0\% \end{matrix}
What should management do in light of this information?
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