Exam 5: Risk Analysis

For each of the following scenarios,determine if it is an indicator of potential cash flow problems:                                                                                                                  a. Growth in accounts receivable or inventories that is less the growth rate in sales. b. Increases in accounts payable that exceed the increase in inventories. c. Capital expenditures that substantially exceed cash flow from operations. d. Sales of marketable securities are less than purchases of marketable securities. e. Other operating current liabilities that grow at a lesser rate than sales. f. A reduction or elimination of dividend payments g. A substantial shift from long-term borrowing to shortterm borrowing.

All of the following are common domestic risks faced by companies except:

One criticism of the interest and fixed charges coverage ratios as measures of long-term solvency risk is that they use earnings rather than cash flows in the numerator.Detail how the interest coverage ratio and fixed charges coverage ratio are calculated.In addition,discuss why using earnings in the numerator is a problem and what method could be used to alleviate this problem.

Changes in interest rates can typically affect firms in all of the following ways except:

Which of the following is not one of the three explanatory variables that determines a firm's market beta?

Mobile Company Mobile Company manufactures computer technology devices. Selected financial data for Mobile is presented below, use the information to answer the following questions: -Refer to the information for Mobile Company.Mobile's Operating Cash Flow to Current Liabilities ratio in 2010 was