1. Does increasing a firm’s inventory turnover ratio increase its profitability? Why should this ratio be computed using cost of goods sold (rather than sales, as is done by some compilers of financial statistics)?
2. Copper Mountain Group (U.S.). The Copper Mountain Group, a private equity firm headquartered in Boulder, Colorado, borrows ?£5,300,000 for one year at 8.375% interest.
a. What is the dollar cost of this debt if the pound depreciates from $2.0290/£ to $1.9480/£ over the year?
b. What is the dollar cost of this debt if the pound appreciates from $2.0290/£ to $2.1670/£ over the year?