Two companies have identical assets and operating activities. Which of
Two companies have identical assets and operating activities. Which of the follow statements is
true?
A) The company with more debt will have lower operating income due to interest expense.
B) Both companies have the same net income.
C) The company with more debt will have higher operating income due to leverage.
D) The company with more debt will have lower net income due to interest expense.
ANSWER
D
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