Problem 1. What industries do you think will have higher financial slack? Why?
Problem 2. There are some companies out there that feel like the end is near so pay out a bunch of returns to investors in panic which is essence is financial slack. Do you think that the SEC can force them to pay that back?
Problem 3. If a company is well matured and investors notice that top management is lining their pockets, this could be bad and they might end up not wanting to be investors any longer. Can investors demand to be paid dividends ever?
Problem 4. One of the things we have seen with ratios is what balances to use most often as denominators but also in other ways. Companies tend to use beginning balances but some use average balances. Do you think that average balances are the best way to go to get the best ratios? Why or why not?
Problem 5. Due to the economy today, do you think that companies' average time on collecting their receivables has gone up? If so, do you think that those companies need to reduce their financial slack by borrowing to cover those receivables they haven't received yet?
Problem 6. For what kinds of companies is financial slack most valuable? Are there situations in which financial slack should be reduced by borrowing and paying out the proceeds to the stockholders? Due to the economy today, do you think that companies' average time on collecting their receivables has gone up? If so, do you think that those companies need to reduce their financial slack by borrowing to cover those receivables they haven't received yet?