1. The industry average inventory turnover ratio is 7 and your company's is 15. This could be good or bad news. Explain each possibility. How would you find out whether it is bad news?
2. You invested $10,000 in the stock of HiFly Inc. two years ago. Since then the stock has done very well more than doubling in value. You tried to analyze HiFly's financial statements twice in the last two year, but were confused by several of the detailed notes to those statements. You haven't worried about it though, because the statements show a steady growth in revenue and earnings along with an unqualified opinion by the firm's auditors that they were prepared using generally accepted accounting principles (GAAP). While checking the status of your investments in The Wall Street Journal this morning you were shocked to see that HiFly's price had declined by 30% since you last checked it a week ago. What may have happened?