Leverage

Full Answer Section Overall, both Apple and Microsoft have a manageable amount of long-term debt. However, Apple's higher debt to equity ratio means that it is more exposed to financial risk. Analysis: The long-term debt burden of a company can be a significant financial liability. However, it can also be used to finance growth and expansion. The key is to ensure that the debt is manageable and that the company has the ability to service it. In the case of Apple and Microsoft, both companies have a manageable amount of long-term debt. However, Apple's higher debt to equity ratio means that it is more exposed to financial risk. This is because Apple has a higher level of debt relative to its equity. However, Apple's interest coverage ratio is also higher than Microsoft's, which means that Apple is better able to service its debt. This is because Apple has a higher level of earnings relative to its debt. Overall, both Apple and Microsoft have a manageable amount of long-term debt. However, Apple's higher debt to equity ratio means that it is more exposed to financial risk. Investors should carefully consider this risk before investing in either company.

Sample Answer Sure, here is a comparison of the long-term debt burden of two publicly traded companies: Company 1: Apple Inc. (AAPL)

• Total long-term debt: \$124.0 billion
• Long-term debt to equity ratio: 0.38
• Interest coverage ratio: 12.6

Company 2: Microsoft Corporation (MSFT)

• Total long-term debt: \$106.0 billion
• Long-term debt to equity ratio: 0.29
• Interest coverage ratio: 14.2

As you can see, both Apple and Microsoft have a significant amount of long-term debt. However, Apple's long-term debt to equity ratio is slightly higher than Microsoft's, which means that Apple has a higher level of leverage. However, Apple's interest coverage ratio is also higher than Microsoft's, which means that Apple is better able to service its debt.