Why is the answr C Correct Why are the previous options not correct Company A and Company B have the same total assets, operating income (EBIT), tax rate, and business risk Company A, however, has a much higher debt ratio than Company B Company A's basic earning power (BEP) exceeds its cost of debt financing (r d ) Which of the following statements is most correct (2 points) a Company A has a higher return on assets (ROA) than Company B b Company A has a higher times interest earned (TIE) ratio than Company B c Company A has a higher return on equity (ROE) than Company B, and its risk, as measured by the standard deviation of ROE, is also higher than Company B's d Statements b and c are correct e All of the statements above are correct

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Question: Why is the answr C Correct? Why are the previous options not correct? Company A and Company B have the same total assets, operating income

Why is the answr C Correct? Why are the previous options not correct?

Company A and Company B have the same total assets, operating income (EBIT), tax rate, and business risk. Company A, however, has a much higher debt ratio than Company B. Company A's basic earning power (BEP) exceeds its cost of debt financing (r_d). Which of the following statements is most correct? (2 points)

a.	Company A has a higher return on assets (ROA) than Company B.
b.	Company A has a higher times interest earned (TIE) ratio than Company B.
c.	Company A has a higher return on equity (ROE) than Company B, and its risk, as measured by the standard deviation of ROE, is also higher than Company B's.
d.	Statements b and c are correct.
e.	All of the statements above are correct.

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