13. An income statement shows how much the firm earned and the cash generated during a period of time.

	a.	True
	b.	False

20. Since depreciation is a non-cash expense, it has no impact on a firm's income taxes.

	a.	True
	b.	False

21. If accounts receivable are collected, the quick ratio increases.

	a.	True
	b.	False

23. If inventory is sold on credit, the quick ratio declines.

	a.	True
	b.	False

25. Crosssection analysis refers to comparing a firm to other firms in its industry.

	a.	True
	b.	False

27. The return on equity represents what the firm is earning on stockholders' investment in the firm.

	a.	True
	b.	False

28. Leverage ratios indicate the extent to which the firm uses debt financing.

	a.	True
	b.	False

29. The higher the ratio of debt to total assets, the smaller is the use of financial leverage.

	a.	True
	b.	False

30. The use of financial leverage may permit the firm to increase the return on equity.

	a.	True
	b.	False

31. An undercapitalized firm has excessive debt relative to equity.

	a.	True
	b.	False

34. Selling shortterm government securities and using the funds to purchase inventory reduces the current ratio.

	a.	True
	b.	False

35. If a firm issues longterm debt and uses the proceeds to retire shortterm debt, the current ratio is unaffected.

	a.	True
	b.	False

37. Increases in income taxes reduce a firm's operating income.

	a.	True
	b.	False