Respond to the following questions thoroughly, in 150-300 words for each question. Use your textbook as your first and major reference.
- Company's often encounter stock splits and reverse stock splits. Why do these splits occur? Explain the short-term and long-term effects of split on a company's financial statements.
- How do the various types of operating and financial leverage impact a company? Provide examples to support your views. What do you think is the appropriate method for a company to determine the amount of leverage it should possess?
- Inventory turnover is an important measure of how a firm is managing its current assets, but differs among firms. For example, the inventory turnover for a grocery store will be much higher than a furniture store. Why might this be the case?