Case Problem 6

Refer to the text page 597(10th Edition) to answer Q1 and Q2. Answer length for each question: one-half to one-page, single spaced.

Q1. Why is Amazon’s cash cycle so much shorter than that of competitor Barnes & Noble ? How does this comparison affect financial management decisions of other retailers ?

Q2. How does Boeing achieve a cash cycle of negative 100 days ?

Q3. Define the following terms as they apply to our work in FIN 201…in ten words or less: structure 2.working capital 3.assets 4.liabilities 5.retained earnings 6.liquidity 7.leverage 8.Sarbanes-Oxley 9.GAAP value versus book value 11.depreciation 12.straight-line versus accelerated depreciation 13.solvency 14.profitability 15. pv 16.fv 17.PVA 18.FVA 19.simple interest 20.compound interest rate 22.Rule of 72 23.annuity 24.required return formula 25.NPV 26.NPV decision rule 27.payback 28.IRR 29.formula for cost of equity 30.formula for cost of debt 31.WACC facility 33.venture capital 34.operating cycle 35.inventory period 36.accounts receivable period cycle 38.profit margin 39.ROE 40. debt/equity ratio.