Two companies with similar net income and asset value

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You are comparing the financial performance of two companies with similar Net Income and Asset Value. Company A has a debt/equity ratio of .50/1 while Company B has a debt/equity ratio of 2/1. Based on this, what general observation may be made regarding the two companies.

A. Company A has a higher level of debt relative to its total capital structure than Company B

B. Company B is likely better positioned to weather downturns in its business than Company A

C. Company A will have a higher return on Equity than Company B.

D. Company B will have a higher return on Equity than Company A

E. Company A will have a higher equity multiplier than Company B.

Reference no: EM131447544

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