Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 367

Comparing to industry averages

Disney Entertainment Aracruz

Paper and Pulp (Emerging

Market)

Market Debt Ratio 21. 02 % 19. 56 % 30. 82 % 27. 71 %

Book Debt Ratio 35. 10 % 28. 86 % 43. 12 % 49. 00 %

Disney is close to the industry-average debt ratio, with market and book value

debt ratios slightly higher than the industry average. It could make the argument

that it is therefore correctly levered. It is, however larger and safer than the

typical comparable firm.

Aracruz has a market debt ratio slightly higher than the industry average though

its book value debt ratio is lower.