HD Corp and LD Corp Have Identical Assets, Sales, Interest

question 51

Multiple Choice

HD Corp and LD Corp have identical assets, sales, interest rates paid on their debt, tax rates, and EBIT. However, HD uses more debt than LD. Which of the following statements is CORRECT?

• A) Without more information, we cannot tell if HD or LD would have a higher or lower net income.
• B) HD would have the lower equity multiplier for use in the DuPont equation.
• C) HD would have to pay more in income taxes.
• D) HD would have the lower net income as shown on the income statement.
• E) HD would have the higher operating margin.

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Grammatical Rules

The set of structural guidelines governing the composition of clauses, phrases, and words in any given natural language.

Overregularizing

The process in which children apply general grammatical rules too widely, often leading to grammatical errors.

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The act of committing oneself beyond what is manageable or financially comfortable.

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