The two components of return on equity are return on assets and francial leverage. True False There is an inverse relationship between a company's solvency level and risk of default. True False When using the indirect method to report cash flows from operating activities, depreciation expense is subtracted from net income to arrive at net cash provided by operating activities. True False Question 47 When using the direct method, losses on the sale of long-term assets are added to net income in the operating activities section. True False Question 48 When using the direct method of reporting cash flows from operating activities, increases in accounts eceivable are subtracted from revenues to arrive at cash receipts from customers. True False