Debt management ratios Companies have the opportunity to use varying amounts of different sources of financing to aoquire their assets including internal and external sources, and debt (borrowed) and equity funds Which of the following is considered a financially leveraged firm?

a. A company that uses only equity to finance its assets
b. A company that uses debt to finance some of its assets

Which of the following is true about thelveraging effect?

a. Under economic growth conditions, firms with relatively low leverage will have higher expected returns.
b. Under economic growth conditions, firms with relatively more leverage will have higher expected returns.

Exercise 4-9presented below is information related to martinez corp. for the year 2017.net sales $1,399,500 write-off of inventory due to obsolescence $80,440cost of goods sold 788,200 depreciation expense omitted by accident in 2016 43,600selling expenses 65,800 casualty loss 53,900administrative expenses 53,500 cash dividends declared 43,300dividend revenue 22,100 retained earnings at december 31, 2016 1,042,400interest revenue 7,420 effective tax rate of 34% on all items exercise 4-9 presented below is information relateexercise 4-9 presented below is information relate prepare a multiple-step income statement for 2017. assume that 61,500 shares of common stock are outstanding. (round earnings per share to 2 decimal places, e.g. 1.49.)prepare a separate retained earnings statement for 2017. (list items that increase retained earnings first.)