To determine which company's leverage contributes most adversely to its credit risk, we need to analyze leverage ratios. The key leverage ratios for credit risk assessment are:

1. Debt/EBITDA Ratio: Measures how many years of EBITDA would be needed to pay off all debt
2. Interest Coverage Ratio (EBITDA/Interest Expense): Measures the company's ability to pay interest expenses

Let's calculate both ratios:

Company 1:

• Debt/EBITDA = 1,125 / 590 = 1.91
• Interest Coverage = 590 / 71 = 8.31

Company 2:

• Debt/EBITDA = 1,360 / 680 = 2.00
• Interest Coverage = 680 / 60 = 11.33

Company 3:

• Debt/EBITDA = 1,562 / 750 = 2.08
• Interest Coverage = 750 / 63 = 11.90

Analysis:

• Debt/EBITDA Ratio: Company 3 has the highest ratio (2.08), indicating the highest leverage relative to earnings.
• Interest Coverage Ratio: While Company 3 has the highest interest coverage ratio (11.90), this is because it has relatively low interest expense compared to its EBITDA.

For credit risk assessment, the Debt/EBITDA ratio is typically more important as it measures overall leverage. Company 3 has the highest Debt/EBITDA ratio (2.08), meaning it has the most debt relative to its earnings capacity, which contributes most adversely to its credit risk.

Even though Company 3 has a good interest coverage ratio, the high absolute debt level relative to earnings makes it more vulnerable to economic downturns or declines in EBITDA, increasing its credit risk.