Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An analyst is evaluating two companies, A and B. company A has a debt ratio of 50% & Company B has a debt ratio of

An analyst is evaluating two companies, A and B. company A has a debt ratio of 50% & Company B has a debt ratio of 25% in this report the analyst is concerned about company B debt level but not about company A debt level. which of the following will best explain this position ? company A has a lower times interest earned ratio and thus the analyst is not worried about the amount of debt. Company B has much higher operating income that company A. company B has higher operating return on assets than company A, but company A has a much higher return on equity than company B. company B has more total assets than company A.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Supply Chain Finance And Blockchain Technology The Case Of Reverse Securitisation

Authors: Erik Hofman, Urs Magnus Strewe, Nicola Bosia

1st Edition

3319623702, 978-3319623702

More Books

Students also viewed these Finance questions

Question

Th ey told me Id have to write a lett er. Whos got time for that?

Answered: 1 week ago