Firm a and Firm B Have the Same Total Assets

Firm A and Firm B have the same total assets, ROA and profit margin (greater than 0) . However, Firm B has a higher debt ratio and interest expense than Firm A. Which of the following statements is correct?

A) Firm B must have a higher ROE than firm A.
B) Firm B must have a higher capital intensity ratio than Firm A.
C) Firm B must have a higher fixed asset turnover than Firm A.
D) Firm B must have a lower ACP than Firm A.

Correct Answer:

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