Debenture bonds are less risky based on debt-to-equity ratio

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Reference no: EM131896657

You plan to purchase debenture bonds from one of two companies in the same industry that are similar in size and performance. The first company has $800,000 in total liabilities, and $1,200,000 in equity. the second company has $600,000 in total liabilities, and $400,000 in equity.

Which company's debenture bonds are less risky based on the debt-to-equity ratio?

Show your calculations to support your decision.

Reference no: EM131896657

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