Problem:
Firm A and Firm B have the same total assets, ROA and profit margin (greater than 0). However, Firm B has a higher debt ratio and interest expense than Firm A. Which of the following statements is correct?
Firm B must have a lower ACP than Firm A.
Firm B must have a higher capital intensity ratio than Firm A.
Firm B must have a higher ROE than firm A.
Firm B must have a higher fixed asset turnover than Firm A.
Note: Please describe comprehensively and provide step by step solution.