You Have Collected the Following Information Regarding Companies C and D

question 61

Multiple Choice

You have collected the following information regarding Companies C and D: • The two companies have the same total assets.
• The two companies have the same operating income (EBIT) • The two companies have the same tax rate.
• Company C has a higher debt ratio and a higher interest expense than Company D.
• Company C has a lower profit margin than Company D.
Based on this information, which of the following statements is most correct?

• A) Company C must have a higher level of sales.
• B) Company C must have a lower ROE.
• C) Company C must have a higher times-interest-earned (TIE) ratio.
• D) Company C must have a lower ROA.
• E) Company C must have a higher basic earning power (BEP) ratio.

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Definitions:

Attitudes

Enduring mental representations that predispose individuals to respond in particular ways to people, objects, or situations based on cognitive, affective, and behavioral components.

Academic Ability

Refers to the skills and proficiency in academic subjects and tasks, often measured through grades, tests, and assessments.

Self-handicapping

A cognitive strategy where individuals create obstacles and excuses for themselves to avoid blame in case of failure.

Procrastination

The action of delaying or postponing tasks or decisions, often leading to stress, anxiety, and lower performance.