CHAPTER 8 QUIZ 26 TO 30 26. For a firm with old, heavy fixed assets, replacement cost accounting will normally decrease the return on equity ratio. 27. LIFO accounting tends to increase inventory profits 28. Regardless of the method of presentation in the financial statements, the analyst should eliminate the effect of extraordinary gains and losses in projecting data into the future. 29. The tax ratio for forest product companies may be low because of the tax treatment given timber cuttings 30. Corporate diversification eases the task of the financial analyst