You Have Collected the Following Information Regarding Companies C and D

Multiple Choice

You have collected the following information regarding Companies C and D: • The two companies have the same total assets.
• The two companies have the same operating income (EBIT) • The two companies have the same tax rate.
• Company C has a higher debt ratio and a higher interest expense than Company D.
• Company C has a lower profit margin than Company D.
Based on this information, which of the following statements is most correct?

A) Company C must have a higher level of sales.
B) Company C must have a lower ROE.
C) Company C must have a higher times-interest-earned (TIE) ratio.
D) Company C must have a lower ROA.
E) Company C must have a higher basic earning power (BEP) ratio.