Topic 2 - Practice Questions.pdf

D suppose you observe that a firms payables period is

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d) Suppose you observe that a firm’s payables period is lengthening over time. What are some possible reasons for this? e) Suppose you observe a firm which currently maintains a debt to assets ratio of 50%. How do you know if this is too high or too low? f) Suppose you observe that a firm with a ROA of 15%. How do you know whether the company is likely to be well managed? g) What can you infer from observing that a firm pays no dividends? h ) What can you infer from observing a firm whose sales per employee are decreasing over time? i ) What can you infer from observing a firm whose sales / assets are increasing over time? j) What can you infer from observing a firm whose book leverage is roughly constant over time but the fraction of total debt that is short term is increasing? k) What can you infer from observing a firm with a large cash-to-assets ratio? l) What can you infer from observing a firm whose current ratio is decreasing over time? m) What can you say about a firm’s operating and cash cycles if you observe that inventory turnover is not changing over time but the receivables turnover is decreasing and the payables turnover is increasing?
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  • Winter '12
  • VincentGregoire
  • Balance Sheet, Generally Accepted Accounting Principles, Ruth Freedman

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