1.Which of the following is true of a firm that has no debt in its capital structure? A Its return on equity (ROe) will be greater than its return on asset (ROA). B. Its return on equity (ROe) will be lesser than its return on asset (ROA). C. Its return on equity (ROE) will be equal to its return on asset (ROA). D. None of the above. 2. Which of the following is NOT true of common-size balance sheets? A. Each asset and liability item on the balance sheet is standardized by dividing it by sales. B. Each asset and liability item on the balance sheet is standardized by dividing it by total assets. C. Balance sheet accounts are represented as percentages of total assets. D. Common-size financial statements allow us to make meaningful comparisons between the financial statements of two firms that are different in size. 3. There are people who believe that the analysis of financial statements has limitations. Which of the statements below would qualify as a limitation of financial statement analysis? A Thorough ratio analysis requires the analyst to refer to benchmarking, which is very easy to misinterpret. B Ratio analysis requires the analyst to evaluate a firm's performance over a period of time to be of any value. oc Ratio analysis requires the analyst to utilize accounting data that is based on historical costs instead current market values. D Proper ratio analysis requires the analyst to rely upon audited financial statements, which can be easily manipulated. 4. Which one of the following is NOT an advantage of using return on equity (ROE) as a goal? OA ROE is highly correlated with shareholder wealth maximization. OB. RoE and the DuPont analysis allow management to break down the performance and identify areas of strengths and weaknesses. OC. ROE does not consider risk. D. All of the above are advantages of using ROE as a goal