State whether the following statements are true or false and support it with reasons .

1. Operating leverage explains the firms ability to pay the amount of debt to the lender.

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2. The firms ROE and ROA are different, this implies that the firm is Financed entirely with common equity. ( )
3. Financial Leverage reflects the amount of fixed operating cost used in the capital structure. ( )
4. The financial leverage explains just the negative effect of the debt financing on the shareholders' profit maximization. ( )
5. Return on asset rises (or decrease) depending on the net profit margin and total asset turnover. ( )
6. Within a leveraged corporation, if the ROA was 12 %, then its ROE must be to 12%. ( )
7. The additional finance needs of the firm are affecting by retained earnings and net profit margin. ( )
8. Operating leverage reflects the financial cost used in the capital structure of the firm.

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9. Capital Budgeting is a short-term decision, include huge expenditures of new fixed assets.

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10. The process of going from the present value (PV) to the future value (FV) is called the discounting process. ( )