Companies Heidee and Leaudy Have the Same Sales, Tax Rate

Multiple Choice

Companies Heidee and Leaudy have the same sales, tax rate, interest rate on their debt, total assets, and basic earning power.Both companies have positive net incomes.Company Heidee has a higher debt ratio and, therefore, a higher interest expense.Which of the following statements is CORRECT?

A) Heidee has more net income than Leaudy.
B) Heidee pays less in taxes than Leaudy.
C) Heidee has a lower equity multiplier than Leaudy.
D) Heidee has a higher ROA than Leaudy.
E) Heidee has a higher times interest earned (TIE) ratio than Leaudy.