Question 2

a. Solvency analysis evaluates a company's ability to pay its long-term debt. (True/False)

b. Times interest earned is a solvency ratio. (True/False)

c. The relationship between income statement and balance sheet items are used to analyze profitability. (True/False)

d. Return on stockholders' equity is a useful measure of liquidity. (True/False)

e. PE ratios measure solvency. (True/False)

f. Prior period adjustments and unusual items can have an effect on profitability. (True/False)

g. Managers analyze both objectives measures and subjective estimates of financial information to help make business decisions. (True/False)