1.The key benefit of financial leverage is that debt capital is less expensive than equity financing, increased the return to shareholders.

True or False

2. Typically, accounts payable and accrued liabilities are recorded at amounts equalling the expected payments that will be made to satisfy them; but long-term debt is disclosed at the present value of expected future payments

True or False

3. Excessive debt financing makes it more difficult for a firm to sustain a prolonged downturn in profits.

True or False

4. The debt-to-capital ratio not only discloses how much temporary liability financing a company has, it also discloses whether the company is likely to be able to handle debt service requirements.

True or False

5. If adjusted return on assets is higher than adjusted return on equity, the firms owners have benefitted from the firms use of debt.

True or False