Firm a and Firm B Have the Same Total Assets

question 120

Multiple Choice

Firm A and Firm B have the same total assets, ROA and profit margin (greater than 0) . However, Firm B has a higher debt ratio and interest expense than Firm A. Which of the following statements is correct?

• A) Firm B must have a higher ROE than Firm A.
• B) Firm B must have a higher capital intensity ratio than Firm A.
• C) Firm B must have a higher fixed asset turnover than Firm A.
• D) Firm B must have a lower ACP than Firm A.

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Definitions:

Accessory Gland

Glands that support the main glands by producing fluids or hormones that aid in processes such as digestion and reproduction.

Bulbourethral

Pertaining to the bulbourethral glands, which are small glands located on either side of the urethra in males that secrete a fluid playing a role in lubrication during sexual activity.

Seminal Vesicles

Glands that produce a significant portion of the fluid that becomes part of semen, contributing to sperm motility and viability.

Urethral Glands

Glands that secrete mucus into the urethra to lubricate it, primarily found in the male urethra.