10. Rex's use of leverage to fund assets and operations is: a. Increasing over time and creditors view this unfavorably because it signals more risk b. Decreasing over time and the company is outperforming other companies in its industry c. Decreasing over time and creditors view this favorably because it signals decreasing risk d. It is always unfavorable for companies to use debt to finance operations and expansion e. None of the above are correct 11. Rex's Debt/Equity is: a. A decreasing number over time indicating less risk and greater ability to cover long-term debts b. Indicating the company utilizes outside funding to support its operations c. Improving over time but still carries more risk than other companies in the same industry d. Trending in the same direction as the debt-to-assets ratio e. All of the above statements are correct 12. Defined Benefit Plans: Which of the following is not used as an assumption about future events that is used in the determination of future pension obligations of the company? a. Interest rates b. Employee turnover c. Mortality rates d. Compensation e. Other post-retirement benefits offered 13. Defined Contribution Plans: All of the following are characteristics of this type of pension plan, except? a. b. c. d. e. Shift the investment risk to the employer: employee bears no risk for future growth Define the contributions to be made by the company A 401(k) plan is a very common type of defined contribution plan Employer contribution is expensed as incurred All of the above are correct For questions 8-11, reference the ratios below: Rex Manufacturing Pet Industry 2018 2017 2016 Interest Cash Coverage Interest Coverage (TIE) Ratio Debt/Assets Ratio Debt/Equity Ratio 7.0 6.54.8 6.1 5.9 3.2 0.6 0.50.4 1.2 1.0 0.9 2018 20172016 9.08.5 8.0 8.5 7.9 74 0.5 0.4 0.3 1.0 0.70.4 8. Which statement best describes Rex's ability to cover interest expense? a. It is deteriorating over time, but the company is underperforming as compared to its industry b. It is improving over time, and the company is underperforming as compared to its industry c. It is improving over time, and the company is outperforming as compared to other companies in its industry d. It is deteriorating over time, and the company is outperforming as compared to other companies in its industry e. None of the above statements are correct 9. Which of the following best describes Rex's interest coverage situation? a. The company has the ability to pay interest on debt out of current earnings b. Interest Cash Coverage is a good short-term indicator of the firm's ability to pay interest expense because depreciation and amortization are added back to EBIT c. The company's ability to cover interest charges is improving over time d. The company's ability is less than the industry average e. All of the above are correct