The Following Debt to Equity Ratio Is for Two Companies

question 61

Multiple Choice

The following debt to equity ratio is for two companies in the same industry.
$$\begin{array} { l c c } & { \text { Company A} } & \text { Campany B } \\\hline\text { Debt to equity ratio } & 4.5 \text { to } 1& 13.6\text { to } 1\end{array}$$
Which of the following statements is always true?

• A)Company A is more profitable than Company B.
• B)Company B is more profitable than Company A.
• C)Company A is more highly leveraged than Company B.
• D)Company B is more highly leveraged than Company A.
• E)None of the answer choices is correct.

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