Firm a and Firm B Have the Same Total Assets

question 84

Multiple Choice

Firm A and Firm B have the same total assets, ROA and profit margin (greater than 0) . However, Firm B has a higher debt ratio and interest expense than Firm A. Which of the following statements is correct?

• A) Firm B must have a higher ROE than firm A.
• B) Firm B must have a higher capital intensity ratio than Firm A.
• C) Firm B must have a higher fixed asset turnover than Firm A.
• D) Firm B must have a lower ACP than Firm A.

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Definitions:

Theories Change

The concept that scientific theories evolve over time as new evidence emerges and older explanations are refined or replaced.

Incorporate

To include or integrate a part into a whole.

Assumptions

Beliefs or statements taken for granted without proof.

Interwoven

Integrated or blended together closely.