Companies HD and LD Have Identical Amounts of Assets, Operating

question 45

Multiple Choice

Companies HD and LD have identical amounts of assets, operating income Which of the following statements is CORRECT?

• A)Company HD has a higher return on assets (ROA) than Company LD.
• B)Company HD has a higher times interest earned (TIE) ratio than Company LD.
• C)Company HD has a higher return on equity (ROE) than Company LD, and its risk, as measured by the standard deviation of ROE, is also higher than LD's.
• D)The two companies have the same ROE.
• E)Company HD's ROE would be higher if it had no debt.

Understand the basics of psychological research methods and their applications.

Recognize the importance of representative samples in research.

Identify and explain different types of correlations and their implications.

Understand the essential elements of an experiment, including control groups, independent, and dependent variables.

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Definitions:

Financial Performance

An assessment of how well a company can use assets from its primary mode of business and generate revenues.

ROE

Return on Equity; a financial ratio indicating the profitability of a company in relation to its equity capital.

EPS

Earnings Per Share; a metric that indicates the portion of a company's profit allocated to each outstanding share of common stock.

Financial Risk

The possibility of losing money on an investment or business venture, including the risk of losing some or all of the original investment.