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:

Cohorts

Groups of individuals who share a common characteristic or experience within a defined period, often used in research to examine changes over time.

Role Diffusion

A concept in Erik Erikson's theory, referring to a lack of clarity in one's life roles and future path, typically during adolescence.

Syntax

The set of rules, principles, and processes that govern the structure of sentences in a language, specifically the arrangement of words and phrases.

Cross-Sectional

A type of observational study that analyzes data of variables collected at one given point in time across a sample population.