Business, 21.04.2020 19:13 macylen3900

Companies HD and LD have the same total assets, sales, operating costs, and tax rates, and they pay the same interest rate on their debt. Both firms finance using only debt and common equity and total assets equal total invested capital. However, company HD has a higher total debt to total capital ratio. Which of the following statements is CORRECT?
a. Company LD has a higher basic earning power ratio (BEP)
b. Company HD has a higher basic earning power ratio (BEP)
c. If the interest rate the companies pay on thier debt is less than their basic earning power (BEP), then company HD will have the higher ROE.
d. If the interest rate the companies pay on thier debt is more than their basic earning power (BEP), then company HD will have the higher ROE.
e. Given this information, LD must have the higher ROE.

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 11:50

The smelting department of kiner company has the following production and cost data for november. production: beginning work in process 3,700 units that are 100% complete as to materials and 23% complete as to conversion costs; units transferred out 10,500 units; and ending work in process 8,100 units that are 100% complete as to materials and 41% complete as to conversion costs. compute the equivalent units of production for (a) materials and (b) conversion costs for the month of november. materials conversion costs total equivalent units

Answers: 1

Answer

Business, 22.06.2019 13:10

Trey morgan is an employee who is paid monthly. for the month of january of the current year, he earned a total of $4,538. the fica tax for social security is 6.2% of the first $118,500 earned each calendar year, and the fica tax rate for medicare is 1.45% of all earnings for both the employee and the employer. the amount of federal income tax withheld from his earnings was $680.70. his net pay for the month is .

Answers: 1

Answer

Business, 22.06.2019 13:40

A.j. was a newly hired attorney for idle time gaming, inc. even though he reported directly to the president of the company, a.j. noticed that the president always had time to converse with the director of sales, calling on him to get a pulse on legal/regulatory issues that, as the company attorney, a.j. could have probably handled. a.j. also noted that the hr manager’s administrative assistant was the go-to person for a number of things that would make life easier at work. a.j. was recognizing the culture at idle time gaming.

Answers: 3

Answer

Business, 22.06.2019 20:30

Data for hermann corporation are shown below: per unit percent of sales selling price $ 125 100 % variable expenses 80 64 contribution margin $ 45 36 % fixed expenses are $85,000 per month and the company is selling 2,700 units per month. required: 1-a. how much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000 and monthly sales increase by $20,000? 1-b. should the advertising budget be increased?

Answers: 1

Answer

You know the right answer?

Companies HD and LD have the same total assets, sales, operating costs, and tax rates, and they pay...

Questions