W and Y are very similar entities with the same level of profit before interest and tax. However, W has gearing of 95% and Y has gearing of 30%.
Which of the following statements is true?
Investing in W carries a higher level of risk than investing in Y.
A greater proportion of profit will be available out of which to declare a dividend in W.
Investors in Y will expect a higher return than investors in W.
Y has a greater commitment to meet interest payments than W.
Submit