Consider each statement separately, considering whether True (mark T) or False (mark F). An acceptable answer may be TFFF. If long-term debt is exchanged for short-term debt, the debt-to-equity ratio will remain unchanged. Issuing common stock will decrease a company's financial leverage. If a company's return on assets is substantially lower than its' cost of borrowing, the common stockholders would normally want the company to have a relatively high debt-to-equity ratio. A lower price-earnings ratio means investors are willing to pay a premium for the stock because of optimistic future growth prospects.