Multiple Choice / True/False (7 points): circle (put a border around) the correct answer.

T F 1. Using short-term loans to purchase capital assets leads to an improved debt-structure for the business.

T F 2. If the firms leverage ratio is 1.0, then the firm's equity/asset ratio must be greater than 0.5.

T F 3. If a farm business has a positive net farm income in 2022, then that business earned a profit.

T F 4. If a farm has zero liabilities, then ROFA and ROFE will be the same.

T F 5. A firm would have an acceptable level of solvency if its debt/asset and equity/asset ratios sum to one.

T F 6. A borrower would pay more total interest on a 10-year loan amortized using an equal total payment plan than the same loan amortized using an equal principal payment plan.

T F 7. If the debt/asset ratio decreases, then the debt/equity ratio will increase.