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Question
Companies Heidee and Leaudy have the same tax rate, sales, total assets, and basic earning power. Both companies have positive net incomes. Company Heidee has a higher debt ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT?a. Company Heidee has a lower times interest earned (TIE) ratio.
b. Company Heidee has a lower equity multiplier.
c. Company Heidee has more net income.
d. Company Heidee pays more in taxes.
e. Company Heidee has a lower ROE.
Answer
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