Which of the following statements is false? a. A firm’s return on equity exceeds its return on investment under conditions of favorable leverage. b. A common-size balance sheet states each asset, liability and shareholder’s equity account as a percentage of total assets. c. Common-size statements are used to evaluate trends and to make industry comparisons. d. Creditors tend to favor a firm with high financial leverage.
Which of the following statements is false? a. A firm’s return on equity exceeds its return on investment under conditions of favorable leverage. b. A common-size balance sheet states each asset, liability and shareholder’s equity account as a percentage of total assets. c. Common-size statements are used to evaluate trends and to make industry comparisons. d. Creditors tend to favor a firm with high financial leverage.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following statements is false?
a. A firm’s return on equity exceeds its return on investment under conditions of favorable leverage.
b. A common-size balance sheet states each asset, liability and shareholder’s equity account as a percentage of total assets.
c. Common-size statements are used to evaluate trends and to make industry comparisons.
d. Creditors tend to favor a firm with high financial leverage.
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