Consider the following statements:

1. Gearing ratio measures the efficiency in the use of assets.

2. Return on equity measures the efficiency in the use of total available funds.

3. Common size analysis is not useful when making comparisons between companies that are very different in their scales of operation.

4. In the earlier years of a non-current assets useful life, the depreciation expense recognised using the straight-line method will be lower than that recognised using the reducing balance method.

5. Cash flow from operating activities will always be the same as the profit.

6. All depreciation methods recoginise the reduction in an non-current assets value in relation to the passing of time.

7. The starting point of the budgeting process is the forecast of purchases of inventory.

8. A companys budgetary system is made of various inter-related budgets.

9. Budgets are generally used as a long-term planning tool.

Required

State whether each of the above statements is True (T) or False (F), and provide reasonable explanation(s) to support your response, i.e. explain why the statement is true or false. (18 marks)