1- Operating leverage is defined as:

1. The use of debt capital instead of equity capital to fund the operations of a firm.

2. Sales growing faster than operating cash flow on the cash flow statement.

3. Sales growing faster than operating expenses allowing operating margins to expand.

4. Operating cash flow growing faster than net income

2- If the inventory account rises on a balance sheet over the course of an accounting period it represents a(n):

1. source of cash.

2. impossible to determine without additional information.

3. use of cash.

4. neither a source or use of cash if the inventory was purchased on account

3- If a firm's debt ratio is greater than 100% and its net debt to EBITDA ratio is 1.0x, the firm is:

1. probably over-leveraged.

2. not necessarily over- or under-leveraged, but does need to raise equity capital.

3. A debt ratio can never be over 100%.

4. probably under-leveraged

4- Depreciation is defined as:

1. The cost allocation method for some long-lived assets.

2. A non-cash expense used to gauge how fast current assets are being depleted.

3. A non-cash expense on the cash flow statement.

4. The amount of assets that must be replenished every period