When the correlation coefficient is weak, it is possible that an association exists but it is not linear.

Income Statement

CFM Majestic Inc Years 1 & 2 ($000,000s) Year 1 Year 2 Sales 381.9 416.3 COGS 244.9 278.9 SG&A 59.7 63.8 Depreciation 13.8 15.4 R & D 5.3 4.3 EBIT 58.2 53.9 Interest Expense 7.3 7.9 Earnings before Income Tax 50.9 46.0 Income Taxes 17.3 14.8 Net Income 33.6 31.2 Referring to the CFM Majestic financial statements, is the change between Year 1 and Year 2 in Total Asset Turnover important in explaining the change in ROA? A) No B) Yes

Depreciation of equipment was recorded twice this period. This would:

A) overstate expenses and overstate assets. B) overstate expenses and understate assets. C) understate expenses and overstate assets. D) understate assets and understate assets.