Which of the Following Statements Is CORRECT

question 37

Multiple Choice

Which of the following statements is CORRECT?

• A) The use of debt financing will tend to lower the basic earning power ratio, other things held constant.
• B) A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure.
• C) If two firms have identical sales, interest rates paid, operating costs, and assets, but differ in the way they are financed, the firm with less debt will generally have the higher expected ROE.
• D) The numerator used in the TIE ratio is earnings before taxes (EBT). EBT is used because interest is paid with post-tax dollars, so the firm's ability to pay current interest is affected by taxes.
• E) All else equal, increasing the debt ratio will increase the ROA.

Learn about the formation of different business entities, including limited liability companies across all 50 US states.

Identify the essential elements and legal tests used to define and confirm the existence of a partnership.

Be aware of the significance of partnership agreements and the provisions that are typically included.

Distinguish between different types of partners and their corresponding rights, liabilities, and duties within a partnership.

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Definitions:

Transportation Costs

Expenses incurred during the transfer of goods or services from one location to another, including shipment, fuel, and labor costs.

Geocentric Staffing Model

A global staffing approach that selects the best individuals for positions regardless of their nationalities, focusing on global business needs.

International Business

Commercial transactions that occur across national borders, involving the exchange of goods, services, technology, and capital.

Qualified Candidates

Individuals who meet the necessary requirements and criteria for a job or position.