Question 1. Which is a more meaningful measure of profitability for a firm, Return on Assets or Return on Equity? Why?
Question 2. There are three factors that affect the present value of an annuity. Explain what these three factors are and discuss how an increase in each will impact the present value of the annuity.
Question 3. Why is the buyer's operating cycle considered to be an appropriate upper limit for the credit period? Define what is the operating cycle. Wouldn't the buyer's inventory period be a better target?