Question 1: TRUE OR FALSE (A-I)

A.Multiplying the car payments times the months of the car loan will show you the total cash paid on the loan.

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B.A high price-earnings ratio means that investors are willing to pay a premium for the companys stock.

C.If a company's return on assets is substantially lower than its cost of borrowing, then the common stockholders would normally want the company to have a relatively high debt/equity ratio.

D.A company whose inventory turnover ratio is much slower than the average for its industry may have too much inventory or the wrong sorts of inventory.

E.Cash payments to repay the principal amount of debt are reported as a cash outflow in the investing activities section of the statement of cash flows.

F.Buying property, plant, or equipment would be reported as a cash outflow on the investing activities section of the statement of cash flows.

G.The collection of a loan made to a supplier would be treated as an investing activity on a statement of cash flows.

H.The required rate of return is the maximum rate of return that an investment project must yield to the acceptable.

I.In the payback method, depreciation is added back to net operating income when computing the annual net cash flow.