6. True or false?

a. A company’s debt–equity ratio is always less than 1.

b. The quick ratio is always less than the current ratio.

c. The return on equity is always less than the return on assets.

Tangible fixed assets Property, plant, and equipment Less accumulated depreciation Assets Balance Sheet Current assets:

Cash and marketable securities Accounts receivable Inventories Other current assets Total current assets Fixed assets:

End of Year Start of Year Net tangible fixed assets Long-term investments Other long-term assets Total assets Liabilities and Shareholders’ Equity Current liabilities:

Debt due for repayment Accounts payable Total current liabilities Long-term debt Other long-term liabilities Total liabilities Total shareholders' equity Total liabilities and shareholders’ equity 581 5,011 2,394 1,351 402 1,039 987 360 2,787 1,043 24 1,157 5,011 119 1,699 1,078 3,358 1,653 4,126 2,113 1,232 254 861 856 269 2,239 881 22 984 4,126 60 1,501 1,028 398 2,927 1,199 Income Statement Cost of goods sold Selling, general, and administrative expenses Depreciation Taxable income Tax Minority interest 4,852 260 10 Net income 474 Dividends 107 Addition to retained earnings 367 1,997 251 744 Net sales 7,911 Earnings before interest and taxes (EBIT) 811 Interest expense 67 1,581 1,440