1. If a firm's sales are held constant, an increase in inventory would increase both the current ratio and inventory turnover.

True

False

2. The acid-test ratio is normally smaller than the current ratio for a firm.

True

False

3. A high interest coverage ratio would normally be associated with a low debt ratio.

True

False

4. Ratios are typically compared with similar figures from history, the competition, and budget.

True

False

5. A common size income statement presents each line item as a percent of assets.

True

False