1. Ratios are used to compare different firms in the same industry.

True or False.

2. Debt utilization ratios are used to evaluate the firm's debt position with regard to its asset base and earning power.

True or False.

3. Heavy use of long-term debt can be of benefit to a firm to help expand, although it adds to the firm's overall level of risk.

True or False.

4. Return on equity will not change if the firm increases its use of debt.

True or False.

5. Industries with cyclical products such as lumber and copperare more sensitive to inflation-induced profits because many sales prices and/or expenses are set by the market.

True or False.

6. Although Apple Computers has a profit margin significantly greater than that of a long-time industry giant such as IBM, IBM continues to have a higher return on equity than Apple. The primary reason for this unusual condition is that IBM has a much greater equity than Apple.

True or False.

7. The stock market tends to move up when inflation goes up.

True or False.