Which of the Following Statements Is Most Correct

question 64

Multiple Choice

Which of the following statements is most correct?

• A) If Company A has a higher debt ratio than Company B, then we can be sure that A will have a lower times-interest-earned ratio than B.
• B) Suppose two companies have identical operations in terms of sales, cost of goods sold, interest rate on debt, and assets. However, Company A uses more debt than Company B; that is, Company A has a higher debt ratio. Under these conditions, we would expect B's profit margin to be higher than A's.
• C) The ROE of any company which is earning positive profits and which has a positive net worth (or common equity) must exceed the company's ROA.
• D) Statements a, b, and c are true.
• E) Statements a, b, and c are false.

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Definitions:

Egocentrism

A cognitive bias where an individual is unable to differentiate between their own perspective and that of others.

Theory Of Mind

The ability to attribute mental states—beliefs, intents, desires, emotions, knowledge—to oneself and others and to understand that others have beliefs, desires, and intentions that are different from one's own.

Sensorimotor Stage

The first stage in Piaget's theory of cognitive development, covering the period from birth to about 2 years of age, where infants learn through interacting with their environment.

Piaget

A Swiss psychologist known for his pioneering work in the study of child development and his theory of cognitive development which outlines how children progress through various stages of intellectual growth.