T or F

1. Profitable firms will never experience cash flow shortages. In other words positive profit guarantees positive cash flow.

2. All else equal, as a firm borrows more money, it's equity multiplier increases.

3. All else equal as a firm's equity multiplier increases, it's ROA will also increase.

4. Assume you are comparing two profitable firms. The firm with the higher EPS is likely the better investment than the firm with lower EPS.

5. From the perspective of a potential investor, a firm with a low P/E may be attractive because the low P/E may indicate an attractive price for the stock.