Business, 04.08.2021 04:50 jamiehorton2000

Below is information for year ended 12/31/15 for Company A and Company B. Company A Company B
Interest expense $400 $0
Tax expense (40%) 400 400
Net income 600 600
Total assets 10,000 10,000
Total debt 5,000 0
Equity 5,000 10,000

Which of the following statements is correct?
a. Company A has same ROE than Company B
b. Company A has used financial leverage to increase its return to its shareholders
c. Company A has a lower ROA than Company B
d. Company A has a lower ROE than Company B

Answers: 3

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Below is information for year ended 12/31/15 for Company A and Company B. Company A Company B
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