Question 4-5: For both firms calculate: (1) ROE = NI/E (2) ROA=N1/A (3) EM=A/E (4) AT= Sales/ / (5) PM = NI/Sales Firm 2 is more profitable (greater ROE) than Firm 1 because: A. It is more efficient in generating sales from its assets B. It is more efficient in limiting its expenses C. It is more efficient in limiting its tax liability D. It is more levered Question 4-1: Did the firm's short-term solvency improve or deteriorate between the end of 2007 and then end of 2008? A. Short-Term Solvency Improved B. Short-Term Solvency deteriorated C. The evidence is mixed Did the firm's Long-term solvency improve or deteriorate between the end of 2007 and then end of 2008? A. Long-Term Solvency Improved B. Long-Term Solvency Deteriorated