Which of the following statements is CORRECT? The ratio of long-term debt to total capital is more likely to experience seasonal fluctuations than is either the DSO or the inventory turnover ratio. If two firms have the same ROA, the firm with the most debt can be expected to have the lower ROE. An increase in the DSO, other things held constant, could be expected to increase the total assets turnover ratio. An increase in the DSO, other things held constant could be expected to increase the ROE. An increase in a firm's total debt to total capital ratio, with no changes in its sales or operating costs, could be expected to lower its profit margin Which of the following statements is CORRECT? If one firm has a higher total debt to total capital ratio than another we can be certain that the form with the higher total debt to total capital ratio will have the lower TIE ratio, as that ratio depends entirely on the amount of debt a firm uses. A firm's use of debt will have no effect on its profit margin If two hrms differ only in their use of debt-i.e. they have identical assets. identical total invested capital operating costs. Interest rates on their debt. and tax rates--but one firm has a higher total debt to total ratio, the firm that uses more debt will have a lower profit margin on sales and a lower retumonasse the The total debt to total capital ratio as it is generally calculated makes an adjustment for the use of under operating leases, so the debt ratios of firms that lease different percentages of the comparable. i If two firms differ only in their use of debt-e. they have identical assets ident operating costs, and tax rates - but one firm has a higher total debt to total capital at debt will have a higher operating margin and return on assets tet the form that is more Question 6