A. Assume that Erie had a leverage ratio of 2.0. This would mean that: (click all that apply)
1. Erie has twice as much equity than debt.
2. Erie has twice as much debt than equity
3. Erie’s assets are equally funded between debt and equity.
4. Erie has twice as much expense than equity
5. Erie has twice as much assets than equity.
6. Eire has twice as much revenue than expenses
B. Suppose a Corporation’s cash flow statement shows a decrease in cash. Which of the following transactions could contribute to the cash decrease (click all that apply)?
1. Issuing LT Debt (bonds)
2. A decrease in accounts receivable (A/R)
3. An increase in inventory
4. A decrease in accounts payable (A/P)
5. Dividends paid to shareholders
6. Sales of common stock
C. Which of the following would be considered a fixed cost (click all that apply)?
1. Inventory Carry Cost
2. Promo Budget Expense
3. Direct Materials
4. Straight-line Depreciation Expense
5. Direct Labor
6. Sales Budget Expense
