Companies ab and cd have identical amounts of assets, Ask an Expert

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Companies AB and CD have identical amounts of assets, investor-supplied capital, operating income, tax rates, and business risk. Company AB, however, has a higher debt ratio than CD. Company AB's ROIC exceeds its after-tax cost of debt, rd(1-T). Based on this information, which of the following statements is correct?

Company AB has a higher ROE than Company CD.

Company AB has a higher ROA than Company CD.

Company AB has a higher TIE than Company CD.

Company AB's ROE would be higher if it had no debt.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92401730

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