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:

Population Standard Deviation

The square root of the variance of a group, measuring how far individual measurements in the population deviate from the population mean.

Confidence Intervals

A range of values, derived from sample statistics, that is believed to contain the value of an unknown population parameter with a certain level of confidence.

Prediction Intervals

A prediction of the range within which future results are expected to occur, with a specified level of confidence, based on existing observations.

Confidence Interval

A series of values, derived from investigations of a sample, expected to incorporate the value of an unrevealed population parameter.