Companies HD and LD have identical amounts of assets, operating

Companies HD and LD have identical amounts of assets, operating


Asked by 5 years ago
398.7k points
  1. Companies HD and LD have identical amounts of assets, operating income (EBIT), tax rates, and business risk. Company HD, however, has a much higher debt ratio than LD. Company HDs basic earning power ratio (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT?

a. Company HD has a higher return on assets (ROA) than Company LD.

b. Company HD has a higher times interest earned (TIE) ratio than Company LD.

c. Company HD has a higher return on equity (ROE) than Company LD, and its risk, as measured by the standard deviation of ROE, is also higher than LDs.

d. The two companies have the same ROE.

e. Company HDs ROE would be higher if it had no debt.

Companies HD
maddy

2 Answers

Answered by 5 years ago
389.5k points

Oh Snap! This Answer is Locked

 Companies HD and LD have identical amounts of assets, operating

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Excerpt from file: 4. Companies HD and LD have identical amounts of assets, operating income (EBIT), tax rates, and business risk. Company HD, however, has a much higher debt ratio than LD. Company HDs basic earning power ratio (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT? a.

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J
Answered by 2 years ago
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Oh Snap! This Answer is Locked

 Companies HD and LD have identical amounts of assets, operating

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Excerpt from file: SCHEDULE D (Form 1120) Department of the Treasury Internal Revenue Service Capital Gains and Losses OMB No. 1545-0123 Attach to Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-IC-DISC, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF, or certain Forms 990-T. See separate

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Views: 705
Asked: 5 years ago

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