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Interest and dividends are paid before income taxes. /span>​

Leverage ratios indicate the extent to which the firm uses debt financing.​

Leverage ratios indicate the extent to which the firm uses debt financing.​

A periodic payment to retire a debt is illustrative of a sinking fund.​

If two investments are mutually exclusive, the firm cannot make both investments.​

If a firm’s current assets and current liabilities decline, the firm had a cash inflow.​

If a firm’s current assets and current liabilities decline, the firm had a cash inflow.​

The cost of retained earnings tends to exceed the cost of issuing new stock because of the flotation costs.

The higher the “times‑interest‑earned,” the safer (i.e., more assured) should be interest payments.​

A cash budget differs from an income statement because the cash budget 1. does not determine profits or losses 2. excludes depreciation expense 3. uses disbursements and not expenses