Answer true or false to each of the following. Briefly explain your reasoning for each answer.

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

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

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

d. A company’s current ratio must always equal or exceed its acid-test ratio.

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

f. Two firms can have the same earnings yield but different price-to-earnings ratios.
g. Ignoring taxes and transactions costs, unrealized paper gains are less valuable than realized cash earnings. LO.1