1) A company with a liability structure that is well matched to its current asset distribution can usually operate with:

a) higher leverage

b) lower leverage

c) no leverage

d) increased liquidity

2) Leverage measures DO NOT:

I. Determine repayment ability

II. Indicate if asset and liability levels are appropriate

III. Measure cash flow

IV. Provide a means of gauging the degree of risk associated with lending to the company