If Company A uses more debt than Company B and both companies have identical operations in terms of sales, operating costs, etc., which of the following statements is true?(a) Company B will definitely have a higher current ratio.(b) Company B has a higher profit margin on sales than Company A.(c) The two companies have an identical profit margin on sales.(d) Company B's return on total assets would be higher.
If Company A uses more debt than Company B and both companies have identical operations in terms of sales, operating costs, etc., which of the following statements is true?(a) Company B will definitely have a higher current ratio.(b) Company B has a higher profit margin on sales than Company A.(c) The two companies have an identical profit margin on sales.(d) Company B's return on total assets would be higher.
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter14: Completing A Quality Audit
Section: Chapter Questions
Problem 24CYBK
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If Company A uses more debt than Company B and both companies have identical operations in terms of sales, operating costs, etc., which of the following statements is true?
(a) Company B will definitely have a higher current ratio.
(b) Company B has a higher profit margin on sales than Company A.
(c) The two companies have an identical profit margin on sales.
(d) Company B's
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