Two Companies Have Identical Assets and Operating Activities

question 78

Multiple Choice

Two companies have identical assets and operating activities.Which of the follow statements is true?

• A) Both companies have the same net income.
• B) The company with more debt will have lower operating income due to interest expense.
• C) The company with more debt will have higher operating income due to leverage.
• D) The company with more debt will have lower net income due to interest expense.