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Company A and Company B have the same total assets, Return on Assets (ROA), and profit margin. However, Company A has higher liability-to-asset ratio and
Company A and Company B have the same total assets, Return on Assets (ROA), and profit margin. However, Company A has higher liability-to-asset ratio and interest expense than Company B. Which of the following statements is most correct? Select one: a. Company A has a lower ROE than Company B. b. Company A has a lower operating income (EBIT) than Company B. c. Company A has a higher equity multiplier (EM) than Company B. d. Company A has a lower total assets turnover than Company B. e. Company A has a lower net income than Company B. Clear my choice Last year Southern Chemicals had sales of $400, assets of $146, a profit margin of 5%, and an equity multiplier of 1.6. The CFO believes that the company could reduce its assets by $20 without affecting either sales or costs. Had it reduced its assets in this amount, and had the liability-to-asset ratio, sales, and costs remained constant, by how much would the ROE have changed
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