If a firm has a positive tax rate and a positive operating ROA, and the interest rate on debt is the same as the operating ROA, then operating ROA will be ________.

A) greater than zero, but it is impossible to determine how operating ROA will compare to ROE
B) equal to ROE
C) greater than ROE
D) less than ROE

Operating ROA

A profitability ratio that measures how efficiently a company utilizes its assets to generate operating income.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively a company uses investments to generate profit.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.