The following data are available for a company and its industry:

Company Common-Size Balance Sheet As of 31 December 2013

 
Percent

Assets
 

Cash and short-term investments
43.2

Accounts receivable
9.4

Inventory
0.6

Total current assets
53.2

Net property, plant, and equipment (PP&E)
3.9

Goodwill
40.0

Other long-term assets
2.9

Total assets
100.0

Liabilities and Shareholders’ Equity
 

Short-term debt
1.6

Accrued liabilities and accounts payable
17.8

Total current liabilities
19.4

Long-term debt
20.1

Other long-term liabilities
6.5

Total liabilities
46.0

Total stockholders’ equity
54.0

Total liabilities and shareholders’ equity
100.0

Data for Comparison
Industry

Debt to equity
50.0%

Long-term debt to equity
40.0%

Which of the following statements about the company is most appropriate? The company:

  1. has more financial leverage than the industry.
  2. has made significant acquisitions in the past.
  3. is an electric utility.

I answered 1. but the answer is 2.

Isn’t financial leverage equal to Assets/Equity which for the company is 100/54 = 1.85 while for the industry it must be 1.5 i.e (we know D/E = 0.5 so D = 0.5E we also know A = D+E so A = 1.5E so A/E aka fin. leverage is 1.5)

Am I missing something?