A capital expenditure ratio greater than 1.0 indicates the company was able to generate enough operating cash to cover investments in property, plant and equipment True False The percent cost of capital is typically the company's percentage cost to obtain investment funds. True False Although economic value added (EVA) is similar to residual income, adjustments are made to the financial information to better reflect the economic results of the division True O False When residual income is used to evaluate division managers, the goal for each division manager is to increase residual income over time. True O False Exhibit 12-4 Manning Company uses the indirect method to prepare the statement of cash flows. The following amounts are shown in its December 31, 2017, financial statements. December 31, 2017 December 31, 2016 Accounts receivable $ 663,000 $600,000 Cost of goods sold $1,800,000 Sales revenue $2,400,000 Accounts payable $ 255,000 $195,000 Inventory $ 270,000 $375,000 Salaries payable $ 45,000 $ 30,000 Salaries expense S 165,000 $144,000 Refer to Exhibit 12-4. How will the change in inventory be reported in the operating activities section of the statement of cash flows? The decrease of S105,000 will be subtracted from net income. The decrease of $105,000 will be subtracted from cost of goods sold. The decrease of S105,000 will be added to cost of goods sold. The decrease of S105,000 will be added to net income