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.
Answer: A
You might also like to view...
Bond interest expense is calculated as the stated rate times the carrying value of the bonds
Indicate whether the statement is true or false
Which of the following is not a reason why a corporation may choose to not pay dividends?
A. The corporation does not have adequate retained earnings. B. The board and management prefer to reinvest all net income for future growth. C. The corporation does not have adequate cash. D. All of these are valid reasons to not pay dividends.
If a time series exhibits a strong, linear upward trend, the value of the correlation coefficient, r, is expected to be positive and close to -1
Indicate whether the statement is true or false
Which of the following losses would be covered under a Commercial General Liability Policy that has no endorsements?
I. The named insured rented a building and an employee of the named insured negligently started a fire at the rented building. II. The cost to recall defective products A) I only B) II only C) both I and II D) neither I nor II