Company A and Company B have the same total assets, operating income (EBIT), tax
ID: 2624446 • Letter: C
Question
Company A and Company B have the same total assets, operating income (EBIT), tax rate, and business risk. Company A, however, has a much higher debt ratio than Company B. Company A's basic earning power (BEP) exceeds its cost of debt financing (rd). Which of the following statements is most correct?
a.
Company A has a higher return on assets (ROA) than Company B.
b.
Company A has a higher times interest earned (TIE) ratio than Company B.
c.
Company A has a higher return on equity (ROE) than Company B, and its risk, as measured by the standard deviation of ROE, is also higher than Company B's.
d.
Statements b and c are correct.
e.
All of the statements above are correct.
I need explain of each selection.
a.
Company A has a higher return on assets (ROA) than Company B.
b.
Company A has a higher times interest earned (TIE) ratio than Company B.
c.
Company A has a higher return on equity (ROE) than Company B, and its risk, as measured by the standard deviation of ROE, is also higher than Company B's.
d.
Statements b and c are correct.
e.
All of the statements above are correct.
I need explain of each selection.
Explanation / Answer
d.
Statements b and c are correct.
d.
Statements b and c are correct.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.