Companies HD and LD Have Identical Amounts of Assets, Investor-Supplied

question 34

Multiple Choice

Companies HD and LD have identical amounts of assets, investor-supplied capital, operating income Which of the following statements is CORRECT?

• A) Company HD has a higher return on assets (ROA) than Company LD.
• B) Company HD has a higher times interest earned (TIE) ratio than Company LD.
• C) Company HD has a higher return on equity (ROE) than Company LD, and its risk as measured by the standard deviation of ROE is also higher than LD's.
• D) The two companies have the same ROE.
• E) Company HD's ROE would be higher if it had no debt.

Understand the concept of financial projection including sales, dividends, and external financing needs.

Analyze the impact of capacity operation on financial projections and performance metrics.

Calculate dividend payouts based on earnings and dividend payout ratios.

Identify and calculate the external financing needs under different scenarios.

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Definitions:

Phineas Gage

A historically significant individual in the study of neuroscience and psychology, known for surviving a severe brain injury that altered his personality and behavior.

Hippocampus

A region of the brain crucial for learning and memory, particularly for forming new memories.

Brain Plasticity

The ability of the brain to change and adapt in response to experience, including the reorganization of its structure, functions, or connections.

Somatic Nervous System

Part of the peripheral nervous system that manages voluntary movements and the transmission of sensory signals to and from the central nervous system.