1. All databases and websites use the same inputs and formulas when calculating financial ratios so it is fine to compare ratios determined for one firm obtained from Yahoo Finance to the financial ratios of a second firm obtained from the database Mergent Online

   True

   False

2. When comparing the operating performance of two firms with different levels of leverage (different amounts of debt in their capital structure), the ratio Basic Earning Power is often used since it compares earnings before interest expenses and taxes are taken out with total assets.

   True

   False

3. Firms with stable cash flows such as utilities and railroads tend to have more debt in their capital structure. Firms with unstable cash flows, such as high tech firms tend to have less debt in their capital structure.

   True

   False

4. The DuPont Identity helps investors to assess the factors driving a firms return on equity including how well the company controls its expenses, how well it utilizes its assets and how much debt it has in its capital structure.

   True

   False