Companies HD and LD have the same sales,tax rate,interest rate on their debt,total assets,and basic earning power.Both companies have positive net incomes.Company HD has a higher debt ratio and,therefore,a higher interest expense.Which of the following statements is correct?
A) Company HD pays less in taxes than Company LD.
B) Company HD has a lower equity multiplier than Company LD.
C) Company HD has a higher ROA than Company LD.
D) Company HD has more net income than Company LD.
Correct Answer:
Verified
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