Problem

True or false?a. A company’s assets-to-equity ratio always equals one plus its liabilities...

True or false?

a. A company’s assets-to-equity ratio always equals one plus its liabilities-to-equity ratio.


b. A company’s return on equity will always equal or exceed its returnon assets.


c. A company’s collection period should always be less than itspayables period.


d. A company’s current ratio must always be larger than its acid testratio.


e. All else equal, a firm would prefer to have a higher asset turnoverratio.


f. Two firms can have the same earnings yield but different price-to-earnings ratios.


g. Ignoring taxes and transactions costs, unrealized paper gains areless valuable than realized cash earnings.

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Solutions For Problems in Chapter 2