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dakotacsey03
dakotacsey03
07.10.2020 • 
Business

Which of the following statements is CORRECT? a. All else equal, increasing the debt ratio will increase the ROA. b. If two firms have identical sales, interest rates paid, operating costs, and assets, but differ in the way they are financed, the firm with less debt will generally have the higher expected ROE. c. A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure. d. The use of debt financing will tend to lower the basic earning power ratio, other things held constant. e. The numerator used in the TIE ratio is earnings before taxes (EBT). EBT is used because interest is paid with post-tax dollars, so the firm's ability to pay current interest is affected by taxes.

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