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Companies Heidee and Leaudy Have the Same Tax Rate, Sales

Question 82

Multiple Choice

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) Heidee has a lower times interest earned (TIE) ratio than Leaudy.
B) Heidee has a lower equity multiplier than Leaudy.
C) Heidee has more net income than Leaudy.
D) Heidee pays more in taxes than Leaudy.
E) Heidee has a lower ROE than Leaudy.

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