Answer the following statement(s) true (T) or false (F)
1. An increase in the return on sales ratio probably means that the company is becoming more profitable.
2. When investors ares attempting to determine how the company is financed, either debt or equity financing, they should examine debt ratios.
3. A company measures its ability to pay long-term debts through equity ratios.
4. The higher the debt-to-equity ratio is, the greater the chance that the firm will be unable to meet its obligations.
5. The higher the times-interest-earned ratio is, the more likely it is that the firm may have trouble making its interest payments to its creditors.
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
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What will be an ideal response?
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