Which of the following statements is correct a firm that employees financial leverage will have a higher equity multiplier than otherwise identical firm that has no debt in its capital structure if two firms have identical sales interest rates paid operating cost and assets but different in a way they are finance the firm with less debt will generally have the higher expected ROE all these equal increasing debt ratio will increase the ROA the use of debt financing will tend to lower the basic earning power ratio of things help constant the numerator use in the TIE ratio earnings before taxes EBTEBT is used because interest is paid with post tax dollars so the firms ability to pay current interest is affected by taxes taxes