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GAMA Corp. and FAMA Corp. have the same tax rate, sales, total assets, and basic...

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Accounting

GAMA Corp. and FAMA Corp. have the same tax rate, sales, total assets, and basic earning power. Both companies have positive net incomes. GAMA Corp. has a higher debt to asset ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT?

a. GAMA Corp. has a lower times interest earned (TIE) ratio. b. GAMA Corp.has more net income. c. GAMA Corp.pays more in taxes. d. GAMA Corp. has a lower ROE.

Please explain why?

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