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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