Companies HD and LD have identical tax rates, total assets, total investor-supplied capital, and returns on investors' capital (ROIC), and their ROICs exceed their after-tax costs of debt, rd(1 – T). However, Company HD has a higher debt ratio and thus more interest expense than Company LD. Which of the following statements is CORRECT?
a. The two companies have the same ROA.
b. Company HD has a lower ROA than Company LD.
c. Company HD has a lower ROE than Company LD.
d. Company HD has a higher net income than Company LD.
e. The two companies have the same ROE.