1. Ratio analysis involves taking a set of numbers out of the financial statements and forming ratios with them.

True

False

2. Ratio analysis is of significant value in comparing the performance of a firm against its history, its budget, and its competitors.

True

False

3. Profitability ratios give an indication of how investors feel about the company's financial future.

True

False

4. Return on Assets (ROA) measures a firm's ability to utilize its assets without regard to the sources of capital that fund those assets. The return on equity can bias the results by the degree to which the company leverages itself (uses debt).

True

False

5. The Du Pont equations can be used to isolate problems.

True

False