Companies Heidee and Leaudy are virtually identical in that they are both profitable, and they have the same total assets (TA), Sales (S), return on assets (ROA), and profit margin (PM). However, Company Heidee has the higher debt ratio. Which of the following statements is CORRECT?
A. Heidee has lower operating income (EBIT) than Leaudy.
B. Heidee has a lower total assets turnover ratio than Leaudy.
C. Heidee has a lower equity multiplier than Leaudy.
D. Heidee has a higher fixed assets turnover ratio than Leaudy.
E. Heidee has a higher ROE than Leaudy.
Answer: E
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