TRUE/FALSE
1.All other things being equal, a highly-automated company is riskier than one with less automation.
2.The use of fixed costs to increase net income as sales increase is known as operating leverage.
3.A high percentage of fixed costs relative to variable costs will reduce the potential for high profits.
4.A firm's ability to repay creditors is usually directly associated with its ability to use its long-term assets to generate profits and cash flows.
5.Return on assets is computed as sales divided by total assets.
6.Profit margin is the ratio of net income to sales.
7.Return on assets would be increased by an increase in profit margin assuming that total assets remained constant.
8.An increase in total assets without a proportionate increase in sales, will result in a decrease in asset turnover.
9.If a company is able to earn a higher percentage of profits for each additional dollar of product it sells over its current percentage, then the company’s efficiency has improved.
10.Accounting rules under GAAP, require plant assets to be reported at market value.