Two operationally similar companies, HD and LD, have the same total assets, operating income (EBIT), tax rate, and busin
Posted: Wed Jul 06, 2022 6:45 pm
Two operationally similar companies, HD and LD, have the sametotal assets, operating income (EBIT), tax rate, and business risk.Company HD, however, has a much higher debt ratio than LD. AlsoHD's return on invested capital (ROIC) exceeds itsafter-tax cost of debt, (1-T)rd. Which of the followingstatements is CORRECT?